Sir Richard Branson 'devastated' as Virgin Trains could disappear

Virgin Trains could disappear from the UK within months after it was blocked from bidding from an extension to its West Coast mainline franchise.

The operator has run the route - which includes services from London Euston to Manchester, Liverpool and Glasgow - since 1997.

Virgin Trains is 51% owned by Virgin Group - but Stagecoach, which owns the remaining 49%, has been barred by the Department for Transport (DfT) from bidding for three contracts amid an ongoing row over pensions.

Sir Richard has said he is "devastated" by the decision, adding: "This means that Virgin Trains could be gone from the UK in November.

"I am devastated for the teams who have worked tirelessly to make Virgin Trains one of the best train companies in the UK, if not the world.

"Virgin Trains has led in the industry for more than 20 years and we wanted this to continue for many more years."

Stagecoach said it was told by the DfT that it had been barred from the East Midlands, South Eastern and West Coast franchise competitions after submitting non-compliant bids "principally in respect of pensions risk".

Bidders had been asked to bear the full long-term funding risk on relevant sections of the railways pension scheme.

Sir Richard said no one knew how big such a bill might eventually be - and that forcing the rail companies to take such risks could lead to more of them failing.

He added: "We're baffled why the DfT did not tell us that we would be disqualified or even discuss the issue.

"We can't accept a risk we can't manage - this would have been reckless."

Stagecoach chief executive Martin Griffiths said: "We are extremely concerned at both the DfT's decision and its timing.

"The department has had full knowledge of these bids for a lengthy period and we are seeking an urgent meeting to discuss our significant concerns.

"The Pensions Regulator has indicated that an additional £5bn to £6bn would be needed to plug the gap in train company pensions."

The rail industry proposed an additional £500m to £600m for the scheme and Mr Griffiths said this would have provided "better stability and security for members" and better value for taxpayers.

The DfT insisted that Stagecoach was responsible for its own disqualification.

A spokesman said: "It is entirely for Stagecoach and their bidding partners to explain why they decided to repeatedly ignore established rules by rejecting the commercial terms on offer."

The East Midlands franchise has been awarded to Dutch state-owned firm Abellio.

Transport Secretary Chris Grayling said the eight-year franchise would start on 18 August - promising new trains and an 80% increase in morning peak seats into Nottingham, Lincoln and London St Pancras, as well as a new express service from Corby through Luton into London.

A decision on the West Coast route is set to be made in June.

Virgin had submitted a joint bid for the franchise with Stagecoach and France's SNCF.

Meanwhile, Mr Grayling said the DfT was in talks with current South Eastern operator Govia over extending its current deal to November, with an option of a further extension to April 2020.

Stagecoach shares fell 9% on the news.