GNER last night said it could not rule out job cuts after securing the contract to run East Coast Main Line services.

Rail unions the RMT and Aslef have warned of a potential squeeze on staffing after York-based GNER agreed to pay the Government £1.3bn over what, eventually, could be a ten-year contract.

Keith Norman, acting general secretary of the train drivers' union, Aslef, said the decision to award the contract at an "extortionate" level was putting jobs at risk.

Last night, a GNER spokesman said: "We will need to work smarter to deliver continued improvements and it is inevitable that changes will take place, but until we speak to employees and our trade union partners we cannot rule anything in or out."

Experts have suggested that GNER could target off-peak tickets and first-class travel for increases after its chief executive, Christopher Garnett, confirmed fares would rise.

Meanwhile, GNER's bid, which protects its acclaimed restaurant car services and secures the future of its York head- quarters, has the backing of a former British Rail manager.

Peter Rayner said GNER had brought a traditional approach to running the railway as opposed to rival Virgin's "air hostess" style service.

He said: "I don't understand why they have to pay all that money when, in my professional view, they were head and shoulders over the other bidders."

Mr Rayner speculated that, had a consortium of Virgin and Stagecoach won the route, it could have axed cross-country services linking the North-East with Yorkshire, the Midlands and the South-West.

GNER is understood to have entered into an agreement with the Government whereby financial incentives are in place if it meets certain performance targets.