The government said a new 13-year west coast franchise had been won by major transport company FirstGroup, which will begin train services between England and Scotland via Britain’s second biggest city Birmingham from December.
“This new franchise will deliver big improvements for passengers, with more seats and plans for more services,” Rail Minister Theresa Villiers said in a statement.
Virgin has been running the franchise since 1997, during which time it introduced tilting high-speed Pendolino trains to the route.
Branson described the decision to award the franchise to FirstGroup as “extremely disappointing for Virgin, and for our staff that have worked so hard to transform this railway over the last 15 years”.
The British tycoon said that under Virgin, “the West Coast Mainline has been transformed from a public liability into a valuable asset for the UK, worth many billions of pounds”.
Branson added in a statement: “The service is a British success story and one to put up against rail companies around the world.”
FirstGroup said the route would return a premium to the government of £5.5 billion (US$8.6 billion), over the term of the franchise.
“We are delighted to be selected by government to operate this unique railway which connects communities across the country and plays a vital role in the UK’s economic growth,” said FirstGroup chief executive Tim O’Toole.
FirstGroup, which employs 124,000 staff, currently operates train and bus services across Britain and North America.