LONDON — A wire service reports that Railtrack, the collapsed rail infrastructure company, will pay train operator Virgin 100 million pounds ($157 million) in compensation for failing to upgrade one of Britain’s busiest lines, officials said Monday.
Virgin Trains had threatened Railtrack, which had responsibility for tracks, signaling and stations, with court action, saying it had been unable to use its new high-speed trains because of the state of the line.
The payout will be funded by taxpayers because Railtrack is currently in receivership. The payment was brokered by the Strategic Rail Authority (SRA), a government-appointed body responsible for developing the rail network for passengers and freight.
The authority said Monday that Virgin had business difficulties because of the state of the line.
Virgin is “faced with some short-term difficulties in their businesses, largely because they can’t see what the future looks like, when the upgrade will come, when they can actually exploit the new trains,” authority spokesman Nick Newton told the British Broadcasting Corp. “Therefore we have stepped in to stabilize the businesses whilst these major issues are resolved.”
The SRA will provide funds of between 230 million pounds ($360 million) and 465 million pounds ($730 million) to finance Virgin’s franchises on the west coast line and a major cross-country route.
The government announced in October that it was scrapping Railtrack, which has been widely blamed for a series of delays and accidents on Britain’s railways.
The company, created when the former Conservative government split up and privatized British Rail in the 1990s, will be replaced by Network Rail, a private nonprofit firm.
Under the deal, Network Rail will pay 500 million pounds ($785 million) for Railtrack — including 300 million ($470 million) provided by the government. It will also assume Railtrack’s debt of 7.1 billion pound ($11.1 billion).