Train firms demand new role running rail network

Train operators will demand an emergency meeting with the Government after the general election amid deepening anxiety over the future of Railtrack and its ability to run the network.

The infrastructure business formally lost its status as a blue-chip company yesterday as it was removed from the FTSE-100 Index, while its shares ended the day another 4 per cent down, confirming a further decline in City confidence.

Senior train company executives are expected to urge the Secretary of State for Transport in the new government to give them far greater involvement in running the network. Stagecoach, National Express and Virgin are all interested in operating the track.

The Strategic Rail Authority, which oversees the system on the Government's behalf, is known to be concerned about Railtrack's ability to raise capital and will be raising their concerns with the new government. The collapse in the share price has dashed any hopes of Railtrack being able to raise new funds by issuing more stock. It could also undermine the company's ability to raise additional debt finance. Railtrack had hoped to issue up to £3bn of bonds this summer or autumn to help plug the £3.6bn "black hole" that has appeared in its finances.

In an interview yesterday, the Prime Minister said that he had ruled out renationalisation of Railtrack, but revealed that he had looked at the possibility in great detail. Tony Blair insisted that while such a move would bring a big cheer, it would "not be in the interests of the travelling public".

He said that such a move would mean the Government would not only be obliged to pay for Railtrack's shares, but also its debts of more than £3bn.