Angry commuters rejoice. The Department for Transport has announced a new strategic vision for UK rail networks, including reopening previously closed railway lines to increase capacity and reduce congestion on British trains. The government also indicated changes to be made to some rail contracts, including the East Coast franchise that has weighed so heavily on Stagecoach (SCG).
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News that the franchise will be replaced in 2020 instead of March 2023 sent Stagecoach's shares up more than 7 per cent. What the terms until then will look like are yet to be negotiated, but Liberum analysts said the early end to the contract reduces the risk that Stagecoach would default on the franchise.
