MTR Chosen for $2.4 Billion London Crossrail Contract

MTR Corp. (66), the operator of Hong Kong’s subway, won a 1.4 billion-pound ($2.4 billion) contract to run the Crossrail train line being built across London.

Transport for London named MTR as its preferred bidder and intends to give the Hong Kong-based company the job, the agency said today in a statement. The contract to run Crossrail trains is for eight years, with an option for two more years.

MTR is a partner in running London Overground services and will build on that “to establish Crossrail as a railway that provides operational excellence and the highest possible level of customer service,” Jeremy Long, MTR’s chief executive officer for European business, said in a separate statement.

Crossrail segments will open in phases from 2015 to 2019, offering east-to-west service across London. About 200 million passengers are expected to travel each year, and the route will provide a 10 percent increase in rail capacity in the capital, according to the project managers. Trains are set to carry more than 1,500 passengers during peak periods, with services linking Reading and Heathrow Airport in the west with Shenfield and Abbey Wood in the east.

“Crossrail will help cut journey times, make it easier for people traveling across the city and create jobs and support growth and regeneration along the route,” Mike Brown, managing director of London Underground and London Rail, said in the TfL statement.

Phased Opening

The line will serve 40 railway stations, including Paddington. The route through the City and Canary Wharf business districts, as well as the West End theater and shopping area, is scheduled to open in late 2018.

MTR beat Arriva Crossrail Ltd., owned by Deutsche Bahn AG; National Express Group Plc (NEX); and a partnership of Paris-based Keolis and Go-Ahead Group Plc (GOG) for the contract. The company will start running trains on May 31 from Liverpool Street to Shenfield.

National Express and Go-Ahead both issued statements saying they’re “disappointed” by the decision and enumerating their recent contract successes. National Express fell as much as 1.8 percent in London trading, while Go-Ahead dropped as much as 2.4 percent.

CEO’s Departure

MTR said on July 16 that Chief Executive Officer Jay Walder will step down next month, a year before his contract expires, as the company seeks new leadership. A committee of independent non-executive directors said that day that Walder failed to exercise “critical judgment” in monitoring construction progress on a high-speed link connecting Hong Kong to China.

The company said in April that completion of work on the Hong Kong section of the rail link will be delayed to 2016 from 2015, leading to a government inquiry. MTR is 76.3 percent owned by Hong Kong’s government, according to data compiled by Bloomberg.

Besides the Hong Kong metro and other services in that city, MTR runs rail systems in cities including Beijing, Melbourne and Stockholm.

To contact the reporter on this story: David Risser in London at drisser@bloomberg.net

To contact the editors responsible for this story: Heather Harris at hharris5@bloomberg.net Tom Lavell, Thomas Mulier

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