Bearish engulfing candle!

Yes Skinny and with volume. Suggests the market believes FGP's bid was a suicide bid until proven otherwise. Heard on the news tonight FGP will have to grow that business at 10% per annum to make a return. Apparently they have identified spare capacity Virgin failed to spot. Branson failed to spot a money making opportunity?? I'll have to think about that!

Let us run West Coast for free, says Branson

Entrepreneur makes temporary offer to run the West Coast line for free to buy time for MPs’ inquiry into controversial decision to hand the franchise to FirstGroup.

Statement re InterCity West Coast Rail Franchise

We understand that Virgin Rail Ltd a subsidiary of Virgin Rail Group, the joint
venture between Virgin Group and Stagecoach Group plc, has brought a legal
challenge against the Department for Transport in relation to the recent award
of the InterCity West Coast rail franchise to FirstGroup.

We have every confidence in the DfT's process which is rigorous, detailed and
fair and in which bids are thoroughly tested. There has been no complaint about
the process, which was carefully described in advance, until Virgin Rail Group
had lost commercially.

Our plans for the new InterCity West Coast franchise include faster journeys,
new trains, more seats and more direct services from London than currently on
offer. There will be improved WiFi, better catering, refurbished stations and
Standard Anytime Fares will be reduced by 15% on average within the first two
years. We look forward to welcoming passengers to their new and exciting
InterCity West Coast service in December and creating a better railway for all.

Our focus is to ensure a smooth transition with continuity for staff and
passengers alike. We want to get on with delivering the many benefits and
improvements we are offering without delay or disruption. We will continue to
prepare for a successful start up of the new franchise on 9 December 2012.

Trading Statement

Commenting, Tim O'Toole, Chief Executive said:

"I am pleased to report overall trading for the first half of the year is in
line with our expectations. With a fundamentally strong and diverse portfolio
of operations we are focused on driving a greater performance and delivering
improved growth and returns. While there is significant work to do we are
satisfied with the progress of the actions we have taken, though we remain
mindful of the uncertain economic backdrop.

"We have leading positions in a sector that is a key enabler of economic growth
and we are confident that the actions we are taking will strengthen the
business for the future. Therefore, reflecting its longer term view, the Board
remains committed to its current policy of dividend growth of 7.0% through to
the end of the financial year 2012/13."

This should put the cat amongst the pigeons today :-

Government scraps $9 billion West Coast rail deal

LONDON | Wed Oct 3, 2012 5:10am BST

(Reuters) - Britain scrapped on Wednesday a $9 billion (5.5 billion pounds) deal that had awarded the West Coast rail line to FirstGroup Plc, citing flaws in the government's figures, just a day after the company had said it was prepared to take over the key mainline train service this year.

FirstGroup in August won the 13-year deal for the London-to-Scotland line with a bid of around 6 billion pounds, but the decision was challenged by Virgin Trains, a joint venture between high-profile billionaire Richard Branson's Virgin Group and Stagecoach.

Statement re: InterCity West Coast Franchise Award

Personally think this is a blessing in disguise

Joe - yes its ironic!

FirstGroup runs a number of bus and rail services across the UK.

Shares in FirstGroup fell recently on the news that it might lose the West Coast rail franchise (it was expected to start running the franchise in December). For this reason, forecasts on FirstGroup's future profitability are not reliable.

It appears, however, that this possible loss is no fault of FirstGroup's. The question for investors is what FirstGroup's long-term profitability will be without the West Coast operations.

Looking back, FirstGroup delivered an operating profit of £448m for 2012. This translated to 31.2p of earnings per share (eps) and a dividend of 23.7p. That equals a historic price-to-earnings (P/E) ratio and yield of 7.8 and 9.8% respectively.

Debts at FirstGroup are high in relation to the company's market cap. However, this type of business typically delivers reliable cash flows and faces little competition. The recent kerfuffle may be an excellent opportunity to grab a high-yielding transport operator at a temporarily depressed price.

Already grabbed and waiting.,,.

West Coast Main Line: Taxpayers 'at risk' in rail bid

All bidders for the West Coast rail franchise were offering too little protection to protect taxpayers against potential losses, the BBC has learned.

The BBC's Robert Peston says that the "entire bidding process was flawed".

Taxpayers would therefore have been exposed to potential losses, he added.

Place your bets.

Virgin to run West Coast route 'for at least nine months'

We know what has hit FirstGroup of late -- the cancellation of its new West Coast Main Line contract after the bidding process was scrapped. The shares have been trading very close to their 52-week low of 184p this week, though they're up a bit at 190p today. Is the depressed price fair, or are the shares oversold?

Well, the company must be worth at least what it was before the rail franchise fiasco, mustn't it? Current forecasts put the shares on a prospective P/E of only 6.3, with a massive 13% dividend yield forecast for the year to March 2013. However, that payment would barely be covered by earnings and there must be a good chance the forecasts are optimistic. Still, with a valuation so low, there is room for a significant dividend cut and the income yield remaining attractive.

We have interim figures from FirstGroup due on Wednesday. FirstGroup's shares plunged when its newly won West Coast rail franchise was cancelled at the beginning of last month due to irregularities in the handling of the bids by the Department of Transport . Since then, the price has picked up a little to 206p, but it's still around 40% down on the year.

At the time of FirstGroup's last trading update, things were in line with expectations, but that was the day before the franchise news broke. Forecasts suggest a full-year dividend of 12%, but that's looking very uncertain. And there's a lot of debt on the books. But with the shares on a P/E of under 7, we could have a nice recovery prospect on our hands.

Already in and waiting, keep going!!!

Half-yearly Report


Overview:

* Overall Group trading during the first half of the year is in line with our
expectations, despite continued economic uncertainty. As previously
indicated, the results reflect the anticipated reductions in operating
profit for UK Bus, where we are taking action to reposition the business
and restore growth, and in UK Rail as a result of the transition to the
three year extension period in First TransPennine Express.

* We are focused on our goals of improved performance and sustainable growth
across the Group and are confident that our actions will create a stronger
business for the future. While there is still more to do, we are pleased
with the progress of the actions we have taken so far.

* The Department for Transport (DfT) has cancelled the InterCity West Coast
competition, in which FirstGroup had been chosen as the winning bidder, and
has paused the current rail franchise competitions. As a result of the
uncertainty this creates, the Board has decided to hold the interim
dividend at last year's level, and will consider the appropriate level for
the full year dividend in May 2013. By that time, the prospects for our UK
Rail division are expected to be clearer, following independent reviews
into the cancellation of the West Coast competition and the future of
franchising.

* As the UK's largest and most successful rail operator, we remain committed
to maintaining our leading position in the rail market and are actively
engaging with the ongoing reviews to help shape the future of franchising.

Operating highlights:

* First Student - progress from a more efficient operating model that we have
established.

* First Transit - continued steady growth across all core segments with a
healthy pipeline of business.

* Greyhound - a transformed business with attractive new products such as
Greyhound Express. The highly flexible operating model we have created is
mitigating the effects of a sluggish economic environment.

* UK Bus - progressing our extensive programme to reposition the business and
create a firmer footing to deliver sustainable growth. We remain confident
in our plans and encouraged by positive early signs in some of our markets.

* UK Rail - strong growth across all of our rail franchises and high levels
of performance > 90% punctuality and reliability.

A couple of big gaps here.