Victory franchise 'will not go to OFT'

The Go-Ahead bus company yesterday expressed confidence that the award of its first rail franchise would not attract the attention of competition authorities.

Victory Railway, a consortium led by Go-Ahead but with a 35 per cent management and employee stake, has won the right to run Thames Trains, which operates services out of London Paddington to Oxford and Stratford- on-Avon. It also operates services between Gatwick Airport and Reading.

Go-Ahead said the Thames Trains would complement its bus services between Oxford and London. But Ian Butcher, Go-Ahead's finance director, dismissed fears that the deal might run into problems with the Office of Fair Trading.

Remarking on the OFT's decision earlier this year to refer National Express' acquisition of the Midland Main Line franchise to the Monopolies and Mergers Commission, he said: "National Express ran a monopoly coach service on that route whereas the Oxford to London run is very competitive and we are the number two."

Shares in Go-Ahead leapt 50p to 367.5p, helped partly by news of a 39 per cent rise in pre-tax profits to pounds 11.9m in the year to June.

Victory has plans to build a new station between Hayes and West Drayton called Heathrow North, which will serve the airport through a frequent bus link. Victory will receive an annual subsidy of pounds 31.7m which will be phased out by 2004. In return Victory will provide pounds 4.25m of working capital and a performance bond of the same amount. Go-Ahead is funding the deal via a placing of 2.28 million shares at 305p.