GO-AHEAD Group has warned that problems affecting the Govia Thameslink franchise, which it describes as facing a ‘very challenging operational and industrial relations environment’, have reduced its profits forecast for the contract, which runs until 2021.

Go-Ahead has a 65 per cent stake in Govia, and the Thameslink franchise has been under pressure since it was launched in September 2014, particularly because of the major congestion problems affecting trains at London Bridge, which is being rebuilt. The Department for Transport issued a ‘Section 55’ Railways Act notice on 7 July last year, because the level of cancellations had triggered a contractual breach of the franchise agreement.

Since then industrial tensions have mounted, and the RMT has staged several strikes this year in its dispute with GTR over the planned extension of driver-only operation on Southern, which was part of the franchise bid.

GTR has also faced challenges from ASLEF over DOO on Gatwick Express, while Southern services have been disrupted outside strike days by high levels of sickness among conductors, which rail minister Claire Perry has described as ‘outrageous’ and a ‘work to rule’.

A ‘Remedial Plan’, dated February but only published by the DfT in the last few days of May, set out plans to improve performance, but Go-Ahead admitted in mid-June that GTR’s problems have forced it to revise its outlook for the year as a result.

Go-Ahead chief executive David Brown said the other Govia franchises, London Midland and Southeastern, ‘continued to trade well,’ but he continued: “GTR continues to work closely with industry partners and to invest in additional resources to deliver the best possible service in a very challenging operational and industrial relations environment.

“While we do expect margins to improve in the longer term, given the very challenging performance and industrial relations environments, we no longer expect to recover the profit shortfalls and as a result margins, on an adjusted basis, over the life of the contract are now more likely to be nearer to 1.5 per cent than the 3 per cent previously expected.”