Arriva reveals £150m Danish franchise deal

ARRIVA, one of Britain’s biggest bus-and-rail players, is extending its operations in Denmark, it announced yesterday.

The Sunderland-based company, which runs Arriva Trains Northern in north east England and Arriva Trains Merseyside, has won a contract to run two regional franchises in Jutland. Arriva said the franchises were estimated to be worth about 150 million over seven years.

Analysts said it was a feather in the cap for Arriva as the two franchises were the first to be awarded to a private company by the Danish state.

They also said that the British group would have been in a strong position to win the contracts - which begin in January next year - as it is already the largest provider of bus services in Denmark. Arriva’s shares closed up 5.25p at 327.25p.

The announcement of Arriva’s Scandinavian expansion came as the group revealed it had agreed with the Strategic Rail Authority the level of funding to operate Arriva Trains Northern and Arriva Trains Merseyside franchises for the period to the contractual expiry date of 2 February, 2003.

A statement to the Stock Exchange said the terms were on the same basis as those for the financial year which ended last Friday .

The new Danish franchises surprised some analysts, who believe the Strategic Rail Authority chairman, Richard Bowker, wants a reduction in the number of UK train operators from the current 25, and that Arriva, as one of the smaller players, looked vulnerable.

However Arriva, which has attracted controversy on its Northern franchise - running commuter and local services in Yorkshire - signalled last month it meant to fight to keep the franchise when it comes up for grabs next year.

The group has faced a flood of criticisms over poor services in the region, while also being forced to push through pay rises of 4,000 per head to tackle a shortage of train drivers. The group has already been shortlisted for a new transpennine franchise.