FirstGroup South Western Railway, TransPennine Express and Avanti West Coast services are operated under franchise agreements signed prior to the pandemic. These have EMAs that are due to expire on September 20. EMAs with franchised operators were set up by the DfT to ensure the continued operation of passenger transport during the coronavirus pandemic, when lockdown operations caused a drop in passenger numbers and, consequently, revenues. In the context of EMAs, dfT waives the operator`s turnover, cost and capital risk and pays a fixed administrative fee with the potential for a small performance-based remuneration. DfT has the option to extend the agreement and GWR has the right to take over the revenue risk until at least 2023, but with the protection of the Forecast Revenue Mechanism. The franchise agreement also provides for the agreement on a restructuring of turnover which would apply at the end of the EMA. GWR As announced on 1 September 2020, the Emergency Measures Agreement for great Western Railway (GWR) has been extended until at least 26 June 2021, below its previous deadlines. GWR-related PCS and performance bonds amounted to GBP 10 million each and liquidity closed in the TOC amounted to GBP 266 million as at 31 March 2020. GWR`s initial emergency agreement was signed on the same day as the new franchise agreement in March and the DfT`s option to extend it was part of that contract.
This process and date is different from our other three rail franchises that already had franchise agreements in place prior to the adoption of pandemic contingency agreements. FirstGroup plc (FirstGroup or the group) is pleased to announce that the Department for Transport (DfT) has extended emergency funding agreements for the UK rail industry for the next six to eighteen months. These agreements, with a maximum duration of eighteen months, aim to put an end to the rail franchising system. They came into force yesterday and contain provisions to end the current franchises when these agreements expire. FirstGroup plc Other rail deals with UK government The emergency contract for Great Western, also operated by First, was extended earlier this month until next June in order to reach the deal operators and the government aspire to. GWR`s initial EMA was signed on the same day as a new franchise agreement in March, using a different process and date than other franchises whose contracts were concluded on September 20 and are expected to expire. Operators have now been set up on much more demanding management agreements, with stricter performance targets and lower administrative costs. Administrative fees no longer exceed 1.5% of the deductible`s cost base before the pandemic begins. When the pandemic hit, we stepped in to stop train traffic for key workers and vital supplies. Today, we are renewing this support with new agreements, called Emergency Recovery Measures Agreements (ERMA), to support the reconstruction of the United Kingdom and continue the fight against the pandemic.
The new treaties under negotiation – the so-called ERMAs or the Emergency Remedial Measures Agreements – should constitute a new transitional phase in a radically changed railway, where the franchise system is abandoned. . . .