THE train operator Great North Eastern Railway will not appeal against a High Court ruling that the Rail Regulator was right to allow increased competition on the East Coast route from a rival train operator, The Times has learnt.

GNER confirmed yesterday that it would not appeal against Mr Justice Sullivan’s decision, which was announced in July, even though the company believed that it was “fundamentally flawed”.

The train operator also denied speculation that Jonathan Metcalfe, its chief operating officer, was about to leave the group. However, the denial failed to convince some analysts, who pointed out that GNER had previously denied that Chris Garnett, chief executive of the group, was leaving. He subsequently resigned two days before Mr Justice Sullivan’s decision.

Industry insiders believe that there will be some significant changes to the rail operator’s senior management team when Mr Garnett leaves the company at the end of this month. Bob MacKenzie, chief executive of Sea Containers, GNER’s parent, who will assume the role of executive chairman at GNER, has a reputation as a severe cost-cutter.

GNER is already in talks with rail unions over cuts to front-line ticket sales staff, with up to 10 per cent of the company’s 3,500 staff expected to leave. A spokesman for the company said that the restructuring was inevitable because of changes to the way that passengers are buying tickets over the internet and from automated ticket machines.

GNER is in discussions with the Department for Transport in an attempt to secure some relief from the impact of the rival operation, Grand Central Trains, which begins on December 10 with services between London and Sunderland.

The department calculated that the impact of Grand Central’s operation on GNER at £109 million, but has emphasised that it does not renegotiate franchises with train operators or bail out troubled franchise holders.

The problems at GNER come at a critical time for Sea Containers, which yesterday briefed bondholders on a preliminary outline of its proposals for restructuring.

It hopes that as many bondholders as possible will join an ad hoc committee of creditors advised by Houlihan Lokey Howard & Zukin, the US investment bank. A spokesman for Sea Containers said that the company was confident that it could agree a restructuring of its $611 million (£323 million) debt by October14.

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