TRANSPORT operator First Group looks set to win the race to clinch the Transpennine rail franchise at the expense of bitter rival, Arriva.

Sources close to the Strategic Rail Authority, which is due to announce the winner in a few weeks time, said the bus and train operator was now the preferred bidder for the franchise.

A decision in First's favour would be a massive blow to Arriva, which has been shortlisted for the Transpennine contract and is also seeking to win the northern franchise.

But Arriva's bid may have been fatally damaged by the on-going pay dispute which has seen hundreds of services cancelled in a succession of strikes.

A spokesman for First Group said: "Obviously it would be fantastic were the franchise to be awarded our way but, at the moment, we are still in the dark."