BRITAIN'S rail network operator said yesterday it was running a "success story" after punctuality improved and it posted profits for the first time.

Network Rail, which is in charge of railway infrastructure, said that passenger numbers were now at levels not seen for nearly 50 years, but admitted that it must do more to meet the challenges presented by that growth.

As a not-for-dividend company, Network Rail will reinvest pre-tax profits of £747m from the six months to September 30.

The figure, which compared with losses of £108m a year earlier, was the first surplus since the business was created in 2002 following the demise of Railtrack.

Chairman Ian McAllister said: "From being a basket case a few years ago, rail is now a success story."

Revenues increased by £984m on the previous six months to £2.88bn. Train punctuality for the period averaged 89.5 per cent - the highest level for seven years.