Stagecoach has failed to reach an agreement with the Government over renewing a major rail franchise which runs services from London Waterloo to the South West.

Stagecoach said the Department for Transport (DfT) had ended talks over its South West Trains subsidiary – which runs commuter and other services from Waterloo to Surrey, Hampshire, Somerset, Berkshire, Devon, Wiltshire and Dorset.

The DfT plans to invite train operating companies to bid for the franchise, which SWT has run since British Rail was privatised in 1996.

It is one of the country's biggest rail franchises, operating more than 1,600 trains a day, serving more than 200 stations and carrying over 200 million passengers a year.

The company said: "Stagecoach Group confirms that it has been notified by the Department for Transport that it is ending the discussions with Stagecoach subsidiary, Stagecoach South Western Trains Limited, regarding the direct award of a new rail franchise.

"The current franchise is due to end in February 2017 and, as previously reported, South West Trains had submitted proposals to the DfT as part of previously announced government plans for the direct award of a new franchise to at least April 2019.

"The DfT has now indicated that it plans to invite applicants to tender for a new long-term franchise to commence sometime in 2017.

"In the meantime, the DfT has indicated that it expects to exercise its pre-contracted option to extend the current South West Trains franchise beyond February 2017.

"The option allows the DfT to extend the franchise to no later than August 2017. Stagecoach does not currently expect South West Trains to earn a significant profit during any extension period."

source: Western Daily Press