West Coast Main Line operator Virgin Rail Group and franchise partner Stagecoach are in talks with the Government over the terms of the franchise after earnings dropped by 80 per cent.
The companies want the Department for Transport to revise terms of operation on the route to allow it to collect extra revenue in an attempt to reverse a major decline in income from the route.
But Stagecoach, in an interim statement, said discussions have not progressed as quickly as hoped with the DfT on planned extensions to the franchise which covers the main Birmingham New Street to London service , although it expects talks to conclude in the second half of 2014.
Stagecoach holds a 49 per cent stake in Virgin Rail Group, which will continue to run the franchise under a temporary deal until at least 2017 after the Government’s botched re-tendering saga that initially awarded the service to FirstGroup.
The decision was eventually reversed after a legal challenge by Virgin.
Bus and rail company Stagecoach said the Virgin Rail Group joint venture had suffered the huge plunge in earnings in the first half due to the change in contract for the franchise, although revenues lifted 6.1 per cent.
However, in a bid to boost to the operation, the DfT has now refunded the costs Virgin incurred in bidding for the long-term franchise, which was due to begin this time last year.
The group has also recovered the legal costs that it incurred in challenging the Government’s initial decision on the award of the franchise.
Stagecoach chief executive Martin Griffiths said: “We are positive about the outlook for the rail sector in the UK where the franchising programme is again moving.
"There is a pipeline of new opportunities in addition to the planned extensions to the duration of the rail franchises operated by our existing high quality train companies.
"Our experience of alliancing with Network Rail over the past 18 months has given us an invaluable insight and understanding that can be used to ensure new franchise bids can deliver better value for money for Government.
"We are also working closely with Government to deliver vital new rail capacity for our customers.”