Sea Containers Ltd. has voiced its disappointment after the Virgin and Stagecoach consortium lost the contract to run trains from London to Scotland.

The Bermuda-based passenger transport and marine container leasing company, which owns GNER trains, operator of the InterCity East Coast service, announced their discontent over the decision of the Department for Transport to award the new 10-year franchise to National Express Group Plc. rather than the Virgin and Stagecoach consortium, of which GNER was a part.

Last December, GNER voluntarily entered into a management agreement with the British Government to continue delivering train services after the early cessation of the franchise which began in May 2005. This was due to a number of unexpected external events, beyond GNER's direct control, which undermined the sustainability of the InterCity East Coast franchise, according to Sea Containers.

These events included the loss of revenue due to the London bombings in July 2005, higher energy and fuel costs, and regulatory permission being granted for a new open access entrant on the route.

While GNER was never in breach of the franchise agreement, it was apparent that the company was not going to be able to meet the significant increase in franchise premium obligations due from May 2007, they said.

Sea Containers sought bankruptcy protection from creditors in the US last October after failing to repay $115 million of debt. The company, which owned a container-leasing business, offices in London and the SeaStreak ferry between New Jersey and Manhattan, won tentative approval in June to borrow $177m to help prop up a subsidiary.

Bob Mackenzie, CEO of Sea Containers and executive chairman of GNER, said: "This will be a sad day for the GNER family of passengers and staff as well as the businesses associated with GNER from Sea Containers itself to the suppliers we have worked closely with over many years.

"We were never in breach of the 10-year contract, but due to all of the unforeseen circumstances and the considerable step-up in premium this year Sea Containers was likely to lose £50m had we held onto the franchise. We therefore voluntarily agreed with the Government to enter into the management contract."