DEBT-RIDDEN National Express could surrender its East Coast Main Line franchise after it revealed the extent of its battle against falling revenues and passenger numbers.

The transport group, which operates the key London to Edinburgh route through the region, said the first quarter of this year had seen continued slowdown, with growth of only 0.3 per cent, compared with nine per cent last year.

Analysts said that would equate to passenger numbers falling by as much as five per cent.

And National Express, saddled with £1.2bn of debt, revealed it is in confidential talks with the Department for Transport (DfT) over the future of its seven-and-a-half year deal to run the franchise, which carries 17 million passengers a year.

The deal, struck in 2007, means the company has to pay £1.4bn to the Government to run the franchise until 2015.

National Express said it was being hindered by the fact it does not receive revenue support from the DfT until the end of 2011.

Last night, speculation intensified that the operator may enter an agreement with the Government to scrap the franchise and replace it with a management contract.

Under such a deal, National Express would operate the route for a fixed fee, as happened with former operator GNER.

Unions said that if the franchise arrangement was terminated, it was a golden opportunity for the route to be nationalised.

National Express last night said it would not reveal the nature of its negotiations with the DfT and said that it would not comment on speculation.

However, the company said the terms of the franchise were agreed in a “very different economic climate”.

The DfT said it does not renegotiate franchises, but declined to comment further.

RMT secretary Bob Crow said: “Rather than plugging in the life-support machine for National Express, ministers should be seizing the chance to return this big section of the rail network to full public ownership and control.”

National Express signalled its plight earlier this year by cutting 750 jobs and warning that more could follow.

Yesterday, it said it was continuing to look at all options to reduce its £1.2bn debt, after it revealed growth had slowed in its East Anglia and c2c rail franchises.

The group’s bus and coach travel was more resilient, with growth of 4.1 per cent, with total revenues for the business up 7.9 per cent on last year.