GNER insists talk of chief's exit is on the wrong track

RAIL operator GNER today rubbished reports that its chief executive was set to quit the firm.

Industry sources had claimed that Christopher Garnett was planning to leave the operator of the East Coast main line, possibly within the next few months.

The possibility of Mr Garnett's departure from one of Britain's top rail companies followed the revelation earlier this week that the company might have to give up its flagship east coast line franchise or face running it at a loss.

That led rail industry sources to claim that he was "set to move".

However, GNER (Great North Eastern Railways) insisted Mr Garnett was not about to quit his post.

"GNER wishes to make clear that its chief executive Christopher Garnett has no plans to step down from his current position," it said in a statement.

Insiders claimed Mr Garnett had decided to leave after the recent decision by the Office of Rail Regulation (ORR) to open up competition on the east coast line to English firm's Grand Central and Hull Trains. Such a move would seriously hurt GNER's income, they said, as the route carries an average of 17 million people a year.

Industry sources saw Mr Garnett moving to a senior position at National Express, perhaps as a replacement for chief executive Phil White, who is nearing retirement.

Analysts reckon GNER's revenues have dropped by around two per cent in the year since it retained its ten-year franchise licence for the east coast main line, hurt partly by the London bombings last July.

But that could now be exacerbated by the ORR's decision to allow the two other companies to operate services.

Mr Garnett has previously told the Government that the 1.3 billion premium GNER promised to the Government over the coming ten years was unlikely to come through. That has left GNER seeking a rebate of around 100m, but the Government is insisting the rail company stick rigidly to the terms of its franchise licence.

Following the ORR's decision, the Department for Transport issued a statement to all rail franchise operators and future bidders that insisted: "The department will insist that a franchisee which is unable to operate to the price it bid should surrender the franchise."

Some in the rail industry believe that the east coast rail franchise that links Edinburgh with several cities in England, should be retendered.

Some bidders are understood to have failed in their bid because they included a clause in their bids that covered the possibility of the route being opened up to competitors. It is thought that GNER, a subsidiary of US-based Sea Containers, had such a clause also but was told to take it out.

Privately, Mr Garnett is understood to have claimed that the DfT had misled him over the chance of rivals taking advantage of any "open access" policies on routes run by GNER. Mr Garnett allegedly claims he was told to "ignore" such possibilities.