REG-FirstGroup Plc: Fourteen new trains to drive First Rail open access growth

FirstgroupAnnouncement

06/12/2024 13:15

 

FIRSTGROUP PLC

fourteen new trains to drive First Rail open access growth

FirstGroup plc (the ‘Group’) is pleased to announce that it has entered
into a Lease Agreement with Angel Trains Limited (‘Angel Trains’) and
Hitachi Rail Limited (‘Hitachi’) for the lease of 14 new trains.
* The Group has signed an agreement with Angel Trains and Hitachi to lease 14
new five-car class 80X Hitachi electric, battery electric or bi-mode trains
(70 cars in total) at a cost of c.£500m including maintenance, over a ten
year lease period
* The trains will be manufactured by Hitachi in County Durham, securing the
skills base and jobs in the local area
* The new trains will enable FirstGroup to significantly expand its open
access portfolio and will be used on the newly announced London-Carmarthen
route and to increase the number of cars on the existing Lumo and Hull Trains
services 
* The agreement also contains an option for FirstGroup to lease up to an
additional 13 trains on the same terms if the Group’s open access
applications are granted by the Office of Rail and Road (‘ORR’)
 

Prime Minister Sir Keir Starmer is visiting Newton Aycliffe, County Durham,
today to celebrate a significant agreement for the Hitachi factory which has
secured an order to manufacture 70 new rail cars for FirstGroup’s growing
open access business, creating certainty for the manufacturing skills base,
and the factory’s future.

 

The Lease Agreement will deliver 14 new trains, which will not only give the
Group a homogenous fleet across its open access operations, ensuring
flexibility and reliability for customers, but also facilitates the Group’s
strategic objective of materially increasing its open access capacity.
Delivery of the new trains is expected to commence in late 2027. The lease
will be financed by Angel Trains, adding to their portfolio of Hitachi assets.
The trains will be maintained by Hitachi at their facilities around the
country.

 

The trains will be used on the Group’s open access rail services, including
the Carmarthen-London route announced on 5 December, and the existing Hull
Trains and Lumo services on the East Coast Mainline.

 

In addition, the agreement provides the Group the option to invest another
c.£460m, with options on a further 13 five-car trains, should the recently
submitted open access applications be successful. These include for a new Lumo
service between London and Rochdale via Newton-le-Willows, Eccles and
Manchester Victoria, the extension of the Lumo service between Glasgow and
Edinburgh, the expansion of the new London-Carmarthen Lumo service to
introduce a new Lumo service between London and Paignton, and a new Hull
Trains service between London and Sheffield via Retford and Worksop.

 

Open access rail operators are set up with solely private investment and take
full commercial risk and opportunity. The successful open access model, which
is supported by Government and the independent regulator ORR, connects
under-served places, helping to drive economic growth and providing additional
capacity on core routes which can push a modal shift away from
carbon-intensive travel.

 

Commenting, FirstGroup Chief Executive Officer Graham Sutherland said:

“The introduction of our new service between London and Carmarthen, and the
extra capacity on Lumo and Hull Trains, will significantly increase our open
access portfolio over the next few years, with further expansion possible
should our recent applications be successful. The new trains, to be
manufactured for us in County Durham by Hitachi, will support UK manufacturing
and offer customers more choice as they consider affordable, environmentally
friendly modes of travel in the future, and we are pleased to be taking them
forward.

 

“We know that growth and innovation are key for the future of the railway
sector and are committed to working with government and all our partners to
provide competitive, sustainable and improved services. Successful open access
services can provide new connections, add capacity, support local businesses
and suppliers, secure jobs and help to drive social mobility and future
economic growth.”

 

Jim Brewin, Chief Director of UK & Ireland at Hitachi Rail, stated:

“This contract is a positive step forward, and just recognition for the hard
work and patience of our teams across the Hitachi Rail UK business over recent
years. We look forward to once again delivering for Hull Trains and Lumo
passengers who will benefit further from our award-winning British built
trains.

 

We owe a lot to the innovation and creativity shown by our customers Angel
Trains and FirstGroup and are excited to work in collaboration to deliver on
our combined ambitions.

 

Equally, we owe a debt of thanks to the Northeast Mayor Kim McGuiness and
other local MPs who have worked tirelessly in support of this private sector
investment.”

 

Malcolm Brown, CEO of Angel Trains, said:

“This is a major milestone for the UK rail industry. In less than three
months we have delivered c.£250m of investment that will bring millions more
passengers onto the rail network, connect key regional centres across the UK,
secure crucial manufacturing jobs and breathe new life into local economies.

 

“This is the first announcement of its kind in six years but our ambitions
don’t stop here - this milestone represents the beginning of a new and
exciting journey, which will see Angel Trains play a leading role in the green
transition of our rail infrastructure.”  

 

 

 Contacts at FirstGroup: Marianna Bowes, Head of Investor Relations Stuart Butchers, Group Head of Communications corporate.comms@firstgroup.co.uk Tel: +44 (0) 20 7725 3354  Contacts at Brunswick Group: Simone Selzer Tel: +44 (0) 20 7404 5959  

 

 Contacts at Panmure Liberum: Nicholas How / John More Tel: +44 (0) 20 3100 2000  Contacts at RBC Europe Limited: James Agnew / Jack Wood Tel: +44 (0) 20 7653 4000  

 

 

Forward-looking statements

Certain statements included or incorporated by reference within this document
may constitute ‘forward-looking statements’ with respect to the business,
strategy and plans of the Group and our current goals, assumptions and
expectations relating to our future financial condition, performance and
results. By their nature, forward-looking statements involve known and unknown
risks, assumptions, uncertainties and other factors that cause actual results,
performance or achievements of the Group to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements. No statement in this document should be construed
as a profit forecast for any period. Shareholders are cautioned not to place
undue reliance on the forward-looking statements. Except as required by the UK
Listing Rules and applicable law, the Group does not undertake any obligation
to update or change any forward-looking statements to reflect events occurring
after the date of this document.

 

Legal Entity Identifier (LEI): 549300DEJZCPWA4HKM93. Classification as per DTR
6 Annex 1R: 3.1.

 

About First Rail Open Access

FirstGroup owns two open access operators, Hull Trains and Lumo, and also
operates Heathrow Express on behalf of Heathrow Airport Ltd.

 

Hull Trains has provided an open access service between Hull and London for 24
years. It runs seven services each day between Hull and London and saw the
introduction of a new fleet of bi-mode trains in 2019, that have reduced CO2
emissions by 65% compared to its previous fleet. Since Covid-19 it has
experienced a 32% increase in customers (bucking national trends) and recent
research shows using the service from Hull to London King’s Cross produces
12 times less CO2 than driving. Hull Trains have increased seat capacity by
500% thanks to FirstGroup’s investment in new and longer trains.

 

Lumo has carried more than 3 million customers, on over 8,500 journeys between
London and Edinburgh since its launch in October 2021. Its entirely electric
fleet means that journeys on Lumo emit 95% less CO2 than flying, 21 times less
than a petrol car and six times less than electric vehicles.

 

Both Lumo and Hull Trains have collectively benefited from a £160m investment
from FirstGroup.

 

Market liberalisation in the EU, with open access competing with state
operators has proven popular. Seven of the ten busiest rail routes in Europe
have competition between operators. On-Rail competition in a number of EU
countries has led to more services, increased efficiency and passenger demand,
lower fares, newer trains, better use of assets and reduced subsidy.

 

Open access businesses have demonstrated the innovation which private
operators can bring to the network – they have demonstrably proven additive
to rail market (often through modal shift away from less sustainable modes),
rather than abstractive of contracted operations. The East Coast Mainline has
recovered post-pandemic quicker than any other line of route and is the only
route in the UK where passenger numbers have grown; with open access operators
playing a key role in this.

 

About FirstGroup

FirstGroup plc (LSE: FGP.L) is a leading private sector provider of public
transport services. With £4.7 billion in revenue and around 30,000 employees,
we transported almost 2m passengers a day in FY 2024. We create solutions that
reduce complexity, making travel smoother and life easier. Our businesses are
at the heart of our communities and the essential services we provide are
critical to delivering wider economic, social and environmental goals. Each of
our divisions is a leader in its field: First Bus is one of the largest
regional bus operators in the UK, serving more than 20% of the population in
the UK with a fleet of around c.4,800 buses, and carrying more than a million
passengers a day. First Rail is one of the UK’s largest rail operators, with
many years of experience running long-distance, commuter, regional and sleeper
rail services. We operate a fleet of c.3,700 locomotives and rail carriages
through three DfT contracted train operating companies: WCP (incorporating
Avanti West Coast and West Coast Partnership Development), GWR and SWR) and
two open access routes (Hull Trains and Lumo). We are formally committed to
operating a zero-emission First Bus fleet by 2035, and First Rail will help
support the UK Government’s goal to remove all diesel-only trains from
service by 2040. During FY 2024 FirstGroup was named as one of the world’s
cleanest 200 public companies for the fifth consecutive year and achieved
Industry Top-Rated status for the first time with Sustainalytics. We provide
easy and convenient mobility, improving quality of life by connecting people
and communities. Visit our website at www.firstgroupplc.com and follow us
@firstgroupplc on X.

 

 

 

 

 



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