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Virgin East Coast train Mr Grayling said he was considering two approaches. One option was to allow Stagecoach to continue operating the franchise on a short-term and not-for-profit basis until a new contract is awarded in 2020. Alternatively, East Coast Mainline could be brought back under government control and be run by the Department for Transport through an operator of last resort. Mr Grayling said: “The problem is that Stagecoach got its numbers wrong. It overbid and is introduction of online shopping now paying a price.” Plan to fix ‘creaking’ railways unveiled by government Labour former transport secretary Lord Adonis accused Mr Grayling of “undertaking another unjustified bailout of Virgin online clothes shopping websites and Stagecoach at the expense of taxpayers”. He said: “The reason for these disgraceful bailouts we’ve been seeing from Mr Grayling is because he simply is not prepared to contemplate putting his duty above ideology and substituting for failing private companies a state company.” However Mr Grayling insisted that there was “no question of a bailout” for the company, adding: “Stagecoach will be held to all of its contractual obligations in full.” He said Stagecoach was set to lose about £200m, equating to more than 20% of its total market value. Mr Grayling said: “It should also act as a stark warning to any company tempted to over-bid in future.” At the same time, Mr Grayling also announced that another joint venture between Stagecoach and Virgin had won an extension to operate the West Coast Mainline rail service between London and Glasgow. He said that this joint venture will operate the West Coast Mainline from 1 April 2018 until potentially 31 March 2020. A Stagecoach subsidiary is also on the shortlist of bidders hoping to operate the East Midlands franchise, scheduled to begin in August 2019. Shadow transport secretary Andy McDonald said: “That Chris Grayling awarded a profitable contract to Virgin and Stagecoach on the West Coast while simultaneously confirming the same companies have collapsed on the East Coast shows Government policy is in chaos.

http://www.bbc.co.uk/news/business-42945709

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