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UK Government Strips Sea Containers' GNER of East Coast Rail Franchise

The British government said Friday it was revoking financially struggling GNER's franchise to operate passenger train services on the east coast mainline between London and Edinburgh.

GNER is a subsidiary of Sea Containers Ltd., which has filed for reorganization under U.S. bankruptcy law.

The Department for Transport invited bids from potential operators for a new franchise, effective within 18 months. In the meantime, GNER will continue to operate the service.

"The government made it clear that rail operators that fall into financial difficulty should expect to surrender the franchise and not receive financial support," said Transport Secretary Douglas Alexander. "To do otherwise could set the precedent that we are willing to bail out operators at extra cost to the taxpayer."