GNER could finally be facing the end of the line when it comes to its East Coast Mainline franchise, it was claimed last night.

Reports suggested the rail operator would be granted a temporary reprieve by the Department for Transport (DfT) and allowed to continue operating services for the next two years on a new "fixed management contract" basis.

However its franchise would then be re-let and a new rail firm selected to run East Coast services.

York based GNER has been seeking a way out of its current financial predicament after bosses at its parent company Sea Containers admitted the £1.3bn it paid to land the ten year franchise was too much.

Sea Containers is in debt, having filed for Chapter 11 bankruptcy proceedings in the US.

Last night, Ernie Preston, a former secretary of the North-East Rail Passengers Committee, said: "This is a complete mess.

"GNER has only had its new franchise for a couple of years and they are already saying we cannot make it work.

"If the reports are true it would be a pragmatic solution, but very disappointing.

"The best outcome for passengers is that if there has to be a change let us get on with it and make it as quickly as possible so everybody knows where they stand and we can get back to normal again."

Peter Wood, a North-East spokesman for Rail Future, which campaigns for better rail services, said: "What is happening now is an inevitable end game for GNER.

"From the DfT's point of view it will take time to sort things out in terms of a new franchise and it cannot allow a scenario where GNER walks away and there is nobody running trains on the East Coast Mainline.

"Hence it would seem to be sensible to make this sort of arrangement."

Last night, GNER referred any calls and inquiries on the matter to Sea Containers.

Sea Containers director of communications Lisa Barnard said: "There are no developments to announce.

"There are a number of options being discussed and we continue to meet with the DfT."

A spokeswoman for the DfT said: "It is really not for us to get drawn into speculation about what might happen in this instance."