THE firm behind East Coast rail journeys has narrowed its focus on train travel after bus services took a hit from cost-cutting councils.

Stagecoach Group has bid for new rail contracts, which bosses hope will augment its already strong presence on the tracks.

The company returned East Coast back to the private sector earlier this year, working alongside Virgin under the Inter City Railways banner to take on the route from the publicly-run Directly Operated Railways.

Officials say the initial success of that venture has been supplemented by a new East Midlands Train franchise, with tenders also now in place to take on the Transpennine Express and East Anglia licenses.

A decision on Transpennine is expected next month, with East Anglia due to be resolved by June 2016.

According to a trading update, rail was the mainstay of Stagecoach’s performance for the 24 weeks to October 17, with like-for-like growth rising 5.8 per cent, compared to just one per cent in its regional bus network.

Virgin Rail Group revenues were up 8.7 per cent in the same period.

Bosses highlighted councils tightening their belts as the main reason for the decline in its bus arm, which runs services across Teesside, Hartlepool, Sunderland and Newcastle.

Ross Paterson, finance director, said: “The UK rail division continues to perform strongly and we have revised up our forecast of 2015/16 operating profit to reflect continued good cost control and clarity around the terms of the new East Midlands Trains franchise.

“That is due to run until March 2018, with the Department for Transport having the option to extend the contract by a year.

“In buses, regional operations’ like-for-like revenue growth continues to come principally from the revenue we receive directly from passengers travelling on services.

“Revenue from tendered and school services has continued to decline, as a result of local authorities reducing spending due to budget constraints, and concessionary revenue growth remains modest.

“Passenger journey numbers in the 24 weeks were 0.3 per cent below last year.”

Stagecoach’s East Coast move wooed the Government with a £3.3bn eight-year deal and promises of creating direct links to London from Middlesbrough and Thornaby, near Stockton, and a new London to Sunderland service.

The endeavour will use trains made at the Hitachi Rail Europe factory in Newton Aycliffe, County Durham.

Speaking to The Northern Echo in March, Virgin tycoon Sir Richard Branson said the route would “sing” under its new operator.

He added: “Compare it to the West Coast.

“When we took that over, it was run down and fairly dilapidated and sad, and staff were demoralised.

“But we invested in rolling stock, transformed it, and have doubled the number of people using it.

“We hope we can do the same with the East Coast by replacing the old rolling stock to give workers something they can be proud of, and passengers something they can enjoy using.

“We will try to make it sing like the West Coast.”