Stagecoach eyes Europe's railways

Stagecoach, the aggressive bus and rail operator, is gauging continental railways for possible privatisation bids in the wake of a European Commission white paper on deregulation.

The Perth-based company, which already owns South West Trains and the Island Line on the Isle of Wight, sees international expansion - especially on the continent - as the key to future growth. "There's no doubt we will turn our attention to Europe," said Graham Eccles, Stagecoach's rail business manager. "We're doing a lot of paper research."

Stagecoach already has a significant presence in the continental bus market, with a small company in Portugal and the continent's largest carrier, Swedbus. Its turnover of pounds 350m last year indicates it will account for a third of the group's total sales.

"The value companies like Stagecoach can add is that we're used to taking state monopolies and shaking them up. We would focus on the bottom line."

Attention will focus on European railways once the British franchising of rail lines is complete in the middle of next year. However, Mr Eccles figures that by then any advantage British companies have from being the first to privatise will have evaporated.

Other privatised descendants of British Rail - particularly South Coast Railways, which is owned by France's Compagnie Generale des Eaux - are expected to get involved in the next great railway boom. But the giant American railroad companies, which are currently tied up in a series of consolidation battles, are also likely to be bidding.

Virginia based CSX - which faces a challenge from Norfolk Southern for its agreed $8.4bn (pounds 5.4bn) takeover of Conrail - already has a joint venture, NDX Intermodal, with the German and Dutch state railways.

The state of the European market varies greatly from country to country, with some sporting flashy rolling stock and strong infrastructure - such as France's TGV high-speed trains - while others are more dilapidated.

Holland scores particularly high on the trainspotters cards because of its high passenger loads. "The first thing that strikes you about northern European railways is that they're part of the fabric of the community," said Mr Eccles.

Stagecoach will also hope to profit from privatised European lines that go to other operators. Porterbrook, its rolling stock leasing company, will also be aiming to expand on the continent.