Virgin Rail Group, the joint venture of transport company Stagecoach and Richard Branson's investment vehicle Virgin Group, has begun court proceedings seeking a review of the decision by the Department for Transport to award the new InterCity West Coast rail franchise to a subsidiary of FirstGroup.
Earlier this month, FirstGroup saw awarded the lucrative contract, taking over from Virgin Rail, which had operated the route since 1997.
Branson, who described Virgin's bid as strong and deliverable, said that he was "extremely disappointed" over the Department for Transport's (DfT) decision, branding it a reflection of its "insanity".
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Writing on his personal blog, Branson said: "Based on the current flawed system, it is extremely unlikely that we would bid again for a franchise.
"To have bid more would have involved dramatic cuts to customer quality and considerable fare rises which we were unwilling to entertain.
"We also did not want to risk letting everybody down with almost certain bankruptcy at some time during the franchise as happened to GNER and National Express who overbid on the East Coast mainline.
"Sadly, the government has chosen to take that risk with FirstGroup and we only hope they will continue to drive dramatic improvements on this line for years to come without letting everybody down."
Stagecoach's share price fell 0.47% to 293.60p by 15:39.
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