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Train and bus operator announces payouts – including £88m to founder Sir Brian Souter and his sister – just days after rail passengers learned they face record fare increases of up to 13% Stagecoach, owner of the South West Trains and East Midlands Trains franchises, has risked the ire of passengers, green campaigners and trade unions with plans to return £340m to shareholders – including an £88m windfall for the brother and sister who founded the group. Under the shareholder payout, Stagecoach’s chief executive, Sir Brian Souter, will take away £51m and his sister, Ann Gloag, will earn just under £37m. The announcement comes just days after commuters learnt they face the highest rises in rail fares since the industry was privatised in the mid-1990s. Regulated fares, such as season tickets, are based on last month’s inflation figure, which was announced on Tuesday. Under the system, prices will rise in January by the rate of the retail price index – 5% in July – plus a further three percentage points. That equates to an average rise of 8% for season ticket holders, compared with 5.8% last year. However, some fares could rise by as much a 13% under the “flex” system that allows train operators to add a further 5% to fares on certain routes provided the average increase across a basket of fares is no greater than the government cap. Gerry Doherty, leader of the TSSA rail union, said: “It is a scandal that Sir Brian Souter is awarding himself a payment of £50m in the same week as rail passengers are told they will have to pay an extra 25% in fares over the next three years.” Doherty, whose union is in merger talks with the RMT, also announced his early retirement, triggering a leadership contest. Bob Crow, general secretary of the RMT trade union, said: “If anyone wanted concrete evidence that transport franchising in the UK is a licence to print money, then here it is. This is a third of a billion pounds stripped out of transport services and dumped straight into the pockets of shareholders rather than reinvested in services.” Stagecoach, however, argues that it is a consistent investor in public transport in the UK, led by multimillion-pound funding of the bus industry – including a £7m investment in electric buses in Newcastle two months ago. Stagecoach said that revenues at its rail business had grown by 8.4% over the past three months while turnover at Virgin Trains, which it co-owns with Sir Richard Branson, had increased by 11.1%. This week Virgin announced annual pre-tax profits of £55.7m, although its results included a premium payment of £110m to the government. Last year Stagecoach’s rail division, comprised of its two wholly owned franchises, made an operating profit of £48.4m. However, its buses are Stagecoach’s biggest profit driver, delivering an operating profit of £153.1m. Stephen Joseph, chief executive of the Campaign for Better Transport, said the payouts were the inevitable consequence of private companies operating public transport in the UK, but added that Stagecoach had demonstrated a commitment to investing in services. “As long as trains and buses are part of the private sector then of course companies will make payouts on their profits, and that’s the way it is. But Stagecoach does invest in its bus fleets and in many cases runs good services on the ground.” Joseph added that CBT’s main issue was with government policy on fares, which is set irrespective of shareholder payouts. Rail industry sources also believe that train operators will not shower commuters with 13% fare increases next January and are more likely to stick with the 8% average. “The market just won’t be able to take that kind of increase,” said one source. Stagecoach Rail transport Transport Travel & leisure Dan Milmo guardian.co.uk