The East Coast rail service, run by National Express, is to be taken into state ownership, after failing to renegotiate its funding contract with the Department for Transport (DfT).
The franchise, which has been suffering from declining passenger numbers and falling sales, is thought to have lost £20m in the fist half of this year.
A division of National Express, NXEC a stand-alone company, runs East Coast. In 2007, National Express bought the franchise, after GNER let go of it. NE agreed to pay the Government £1.4bn to run the rail line, which links Edinburgh and London, until 2015.
National Express is now going to walk away from the underperforming rail franchise. Rail experts, at the time, were of the opinion that the company had agreed to pay too much for it.
NXEC has not yet missed any payments, though when it does, the government will seize the franchise. It is thought this may not occur for some months, however. The DfT will set up a government-owned company to run the route. East Coast will then be put on the market, which is likely to be in 2010.
According to reports, DfT said all East Coast services will continue and all bought tickets will be honoured.
Virgin Trains will make a bid for the franchise depending on the details of the new contract.
