National Express scraps Nuremberg S-Bahn contract

Transport giant National Express has scrapped a deal to run commuter train services in the German city of Nuremberg, dealing a setback to its plan of expanding in Europe’s biggest rail market.

The FTSE 250 business has pulled out of a contract, which it secured in February 2015 and was worth an estimated €1.4bn in revenues over 12 years, to manage the city’s S-Bahn network after Deutsche Bahn, the state-owned incumbent operator, challenged the award.

National Express said that the fight put up by Deutsche Bahn had “substantially delayed” its planned introduction of new trains onto the Nuremberg network that had been due when the contract started in December next year. That delay to the new fleet risked National Express potentially “incurring prohibitive additional cost”, the British company said.

The company has looked to Germany, where it has won other rail contracts, as a lucrative opportunity to expand overseas.

Overall, however, its move into foreign markets, including Bahrain, has given National Express a boost, particularly in the light of sterling’s weakness against other currencies following the Brexit vote.

The company said today that operating profits in the year to date were up 12pc, and 5pc once currency movements are stripped out, sending its shares up 4pc in afternoon trade.