National Express in front for Gatwick rail franchise

National Express, the coach company, has emerged as the surprise preferred bidder for the Gatwick Express rail franchise, beating off bids from Virgin and the management buyout team which had linked in with British Airways.

Disappointed bidders for the Gatwick Express franchise were yesterday told of their failure to gain preferred bidder status and National Express has now entered a two-week sole negotiation period with the Office of Passenger Rail Franchising.

There has been consternation in the City over the leaky nature of the bidding process. One insider said that this was partly as a result of OPRAF's refusal to publish any information about the process. He said: "If OPRAF published the shortlist of bidders, and then announced its decision as soon as it was made, we would not have these problems." There have been two surges in National Express's share price over the past 10 days, suggesting that knowledge of its success leaked out.

The company is also the favourite to win the Midland Main Line franchise, but there are now doubts over whether Roger Salmon, the franchising director, would want a single company to be awarded two franchises. Mr Salmon is, however, facing a dilemma over the paucity of bidders shortlisted for the second tranche of four lines which are currently at the final bid stage.

Sea Containers is known to be the sole preferred bidder for the East Coast Main Line, and Compagnie Generale des Eaux is in the final stages of negotiation to take over Network SouthCentral.

With management buyout teams now out of favour, Mr Salmon may have little choice but to award two franchises to National Express.