Virgin says ruling on train deal unlawful

The company launched a judicial review over the decision on Tuesday, which has delayed the signing of the new West Coast contract.

If taken up by the courts the review will bring uncertainty for Shropshire passengers and staff as they await the promised direct service to London. FirstGroup has pledged to restore direct trains to the capital by 2016.

It is believed Virgin Rail is focusing on three key alleged failings by Ms Greening in its legal challenge.

The company, of which 51 per cent is owned by Sir Richard Branson and 49 per cent by Stagecoach, claims she 'breached her obligations of equal treatment, transparency and her duties to act consistently and rationally'.

However Richard Parry, interim managing director of FirstGroup, said his firm's bid was based on a robust business case which had been tested by the Department for Transport.

He said: "We are very confident that we have a good business plan for improvements across the service. Our plan can be delivered right through to 2026. We have been surprised at the level of campaign mobilised against the decision."

Virgin believes Ms Greening should have ordered FirstGroup to make a guarantee of more than three times the £190 million 'shareholder loan' it is actually providing against the risk that it fails to honour the contract.

A Department for Transport spokesman said: "We will fight these claims robustly and show clearly that these allegations by Virgin and their business partners Stagecoach are ill- founded and misconceived."