20/02/2007

Stagecoach Group plc and the Virgin Group of Companies are pleased to confirm that they have been jointly shortlisted by the Department for Transport (“DfT”) to bid for the InterCity East Coast rail franchise.

Both groups are bidding for the franchise under a 50:50 joint venture company, inter city – railways ltd.

Brian Souter, Stagecoach Group Chief Executive, said: “We are delighted to have been shortlisted for what is one of the UK’s flagship routes. Rail passengers will be at the heart of our innovative plans for the franchise and we look forward to working closely with local stakeholders to develop our proposals. We are committed to providing passengers with a consistently safe, high-quality, fast, frequent and reliable service that will set a benchmark for rail travel in the UK.”

Sir Richard Branson, Virgin Group Founder, added: "This is an exciting opportunity that comes at a time when we are enjoying increasing success and growth on our two existing franchises, Virgin West Coast and Virgin CrossCountry. We will put in a strong bid that is highly competitive, deliverable and will offer lasting improvements to millions of customers."

ENDS

For further information, please contact:
Stagecoach Group
Steve Stewart, Head of Media and Public Affairs
Tel: 01738 442111 or mobile: 07764 774680
email: steven.stewart@stagecoachgroup.com

Virgin Group
Will Whitehorn, Director, Virgin Group
Tel: 020 7229 4738 or mobile 07941 228844
email: will.whitehorn@virgin.co.uk

NOTES TO EDITORS

Stagecoach Group
Stagecoach Group is a leading international transportation group, with extensive bus and rail operations in the UK and North America. The Group's businesses operate around 12,000 vehicles and rolling stock, and employ around 27,000 people.

Stagecoach operates South West Trains, the UK 's biggest commuter rail franchise, which runs nearly 1700 trains a day in the south-west of England out of London Waterloo. The Group also runs Island Line, the country's smallest rail franchise.

The Department for Transport announced in September 2006 that Stagecoach had been selected to operate the new 10-year South Western franchise, which combines South West Trains and Island Line and runs from February 2007.

Stagecoach Group is shortlisted for the East Midlands rail franchise, which runs from November 2007.

Stagecoach operates the Supertram network in Sheffield on a 27-year concession running until 2024.

Stagecoach Group has been shortlisted to submit a final bid to operate the current Manchester Metrolink tram network. Greater Manchester Passenger Transport Executive (GMPTE) has invited Stagecoach to submit a Best and Final Offer to run the existing system and carry out tram maintenance. Stagecoach has also been asked to submit its proposals for a combined operating, systems and infrastructure maintenance contract. The 10-year contracts would run from 1 April 2007.

The Virgin Group of Companies:

The Virgin Group of Companies was established by Sir Richard Branson in 1970 and now encompasses more than 200 companies around the world, operating in sectors ranging from transportation to financial services, mobile telephony, entertainment and retail. Virgin Group's total annual worldwide sales will reach £11 billion in 2007.

Virgin Rail Group

Stagecoach and Virgin are partners at Virgin Rail Group (VRG), which operates the CrossCountry and West Coast inter-city rail franchises. Both franchises commenced in 1997.

Virgin Trains is the brand name of VRG, which is owned 51 percent by Virgin Group and 49 percent by Stagecoach.

VRG and the DfT agreed new commercial terms for the West Coast franchise in December 2006. The agreement put the franchise on new commercial terms that will run through to March 2012. The franchise had been operated on a management contract since July 2002 following the collapse of Railtrack and changes to the infrastructure upgrade to the West Coast main line, which prevented VRG from operating 140mph trains.

VRG is bidding to win the New Cross Country franchise, which is due to start in November 2007.

InterCity East Coast

InterCity East Coast is one of Britain 's busiest long distance rail routes, which links London with several cities in both England and Scotland , including Edinburgh . Short-listed bidders will be asked to bid against a specification based on a consultation process undertaken by the DfT, which is proposing that current services are maintained and that the Leeds half hourly service will continue.