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Wednesday, 11 December, 2002, 19:34 GMT
Government bails out Connex
Connex train
Connex says it cannot afford to carry on operating
The government is stepping in to pay 58m to a private rail company that has said it may be unable to continue running services in the long term.

This package has short and long-term benefits for passengers

Nick Newton, SRA chief operating officer
The Strategic Rail Authority (SRA) has announced that it is bailing out the Connex South Eastern train company which runs services between London and Kent and Sussex.

Connex is said to be making enormous losses and executives now say they cannot continue to operate while losing so much money.

The firm's franchise will now finish at the end of 2006 rather than in 2011.

Kent franchise

The government's rail authority will pay the money to keep the company going for another year.

But it is planning to renegotiate the franchise to ensure that promised new trains are delivered before 2006.

Eventually a new franchise will be advertised and will include local services on the high speed line to the channel tunnel, which is currently under construction.

"This package has short and long-term benefits for passengers," said Nick Newton, the SRA's chief operating officer.

"It secures the continuation of Connex's efforts to improve punctuality, ensures delivery of the programme to replace slam door trains, and opens the way for an expanded Kent franchise from 2007 incorporating the proposed high speed services."

Restoring stability

Critics of the government have said the bail-out is further demonstration that the government will always rescue privatised train operators, rather than letting them go bust.

More than half the 25 train companies have now received extra public money as part of refinancing or restructuring deals.

But an SRA spokesman defended the bail-out.

"Connex had been losing money and was likely to have continued to do so," he said.

"We wanted to have a degree of stability and that's why we have announced the extra subsidy."

Connex is a French-owned private rail firm which runs services throughout Europe.

It was originally awarded both the south central and south eastern franchises, but lost the south central franchise in October 2000 following criticism of its management and performance.

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The BBC's Tom Symonds
"Connex will probably lose the franchise at some point in the future"

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