Alstom, the Birmingham-based train manufacturer, is likely to be hit with a £50m compensation bill because of delays to the fleet of high-speed Pendolino tilting trains it is building for Virgin's West Coast mainline.
The £640m fleet of 53 trains, which are designed to run at 125mph, were due to have been in service earlier this year but are not now expected to be operating at full-speed until autumn next year.
Railtrack is to blame for the delays in upgrading the line so that the trains can run at 125mph. But Virgin could still have introduced the new fleet of Pendolinos and operated them at 110mph without activating the tilt mechanism had they been ready on time. The hold-up has been caused by teething troubles with the Pendolino's train management system which Alstom engineers at the company's Washwood Heath factory in the Midlands are still trying to resolve. The fault is causing the train's on-board computer to send spurious information to the driver.
Although engineers suspect something simple like a wiring fault, they have not been able to trace the problem. The delay in the Pendolino delivery has now run into months and the first train could now be a year late.
Sources said if there was a year's delay then the compensation bill could be £50m. The trains have been ordered by the rolling-stock leasing company Angel Trains, part of Royal Bank of Scotland, and are being leased to Virgin.
The contract is one of the few big train orders in the pipeline for the UK rail industry. Angel has also placed a £400m order with Bombardier for new rolling stock for Virgin's CrossCountry franchise and a £644m contract with Siemens for a fleet of 785 carriages for South West Trains.
The only other major contract is an £856m order for 700 new carriages to be built at Bombardier's Derby factory. The order is from Govia, the new owners of the South Central commuter franchise. The order is being financed by the leasing company Portberbrook, which is now part of Abbey National. It is the biggest order for UK-built rolling stock since privatisation.
The only other UK train orders in the offing are a possible £150m contract for 150 carriages for the Trans-Penine Express and a £150m order for 180 new cars for Connex South Eastern.
The dearth of new business in the UK has prompted Angel to redouble its efforts to win new orders overseas. It has just financed an €80m order for 30 diesel multiple units for two Danish regional commuter services operated by the UK transport group Arriva. A further three or four deals are due to be announced over the next month.
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