FirstGroup plc (LON:FGP) has announced that it has been named as the preferred operator for the London Overground suburban rail network contract by Transport for London (TfL), acting through its subsidiary, Rail for London Limited.
The Group’s subsidiary, First Rail London Limited (FRLL) will become the new operator from 3 May 2026, with an initial eight-year term contract and an option to extend for up to two additional years at TfL’s discretion.
Under the terms of the contract TfL retains all revenue risk and will specify the service levels, with FRLL, as the operator, responsible for the delivery of train services and management of stations. The contract is estimated to have a value of around £3bn, over eight years plus an optional extension period of two years. FRLL will also be responsible for operational performance, customer service and ticketless travel.
The Group will make use of its long-standing expertise and Rail Services capabilities to work alongside TfL to deliver the next chapter of the London Overground, with a number of key improvements set out in the contract. These include:
- an increase in services on the Mildmay and Windrush lines
- supporting TfL’s Vision Zero commitments to deliver a safer transport network
- working with Network Rail, Alstom and other industry partners to deliver continued high performance and passenger satisfaction
- improving the customer experience through investing in information systems, colleague training, enhanced security and better customer information
- continuing to work in partnership with stakeholders to improve accessibility on the network
Leading in sustainability is one of the Group’s four strategic pillars and we strive to be the partner of choice for low- and zero-emission transport. The London Overground has an electric train fleet, and as part of the contract the Group will continue to develop and implement initiatives to reduce the service’s impact on the environment, including improving air quality in line with TfL’s commitment to a 90% reduction in Scope 1 and 2 emissions by 2030.
Graham Sutherland, FirstGroup Chief Executive Officer, said:
“The London Overground has greatly improved connectivity in London, with around four million passengers now using the service every week. We are delighted to have been named as the preferred operator for the service from next May and look forward to welcoming employees who will be joining the Group and to play our part in the success of this vital rail network.
We are an experienced and trusted partner in public transport and look forward to building on our relationship with TfL, for whom we already operate buses, trams and the London Cable Car. Our successful bid for this contract represents another significant step in our strategy to diversify and grow our portfolio, and we will continue to evaluate further growth opportunities like this.”
David Thomas, Head of Concession for London Overground, said:
“London Overground is one of the most popular parts of our transport network, and this new concession puts customers at its heart, helping make the service even better. We’re delighted to welcome First Rail London Limited as our preferred new partner and look forward to working together to deliver a range of benefits for everyone who uses the network.”
Notes to Editors
Additional background on the London Overground and the financial terms of the Concession Agreement
- The London Overground was launched in 2007 to provide better connections between areas outside of central London. TfL took over a series of under-used suburban rail lines and transformed them into a high frequency metro-style service. The Overground network spans six routes and covers 100 miles of railway, 113 stations and all 9 fare zones and around 4 million passengers use the service each week. (Source: London Overground – Transport for London)
- TfL retains all passenger revenue risk, and some cost risk for electricity pricing, regulatory charges and inflation protection up to an agreed amount.
- The contract includes a profit margin on concession payments.
- The service quality regimes provide the opportunity to earn additional fees if the train operator achieves greater levels of performance. Service quality regimes cover operational performance, delivery of customer service levels, customer satisfaction and ticketless travel.
- The Group is obliged to retain a £30m Performance Bond and a Parent company guarantee of £80m.
- First Rail London Limited will continue to be fully consolidated in the Group’s financial statements.
