The Aberdeen-based FirstGroup, which operates trains and buses, has to hang his face after its rival; National Express declined its unsolicited takeover bid.

But FirstGroup is still optimistic and getting ready to renegotiate the terms of its pricey East Coast rail franchise between London and Edinburgh.

An analyst at Astaire Securities, Douglas McNeill, said, "This deal would only be feasible if FirstGroup could show its shareholders that losses at East Coast would be avoided from the outset." 

According to a contract, National Express is to pay the govt. £1.4bn to operate the East Coast rail franchise until 2015.

National Express wants the govt. to amend the franchise. However, Lord Adonis, Transport Secretary has already said no to any changes to the franchise.

It is worth mentioning here that some analysts think that a deal with FirstGroup could put an end to National Express’ deadlock.

No one from National Express or FirstGroup could be contacted for comments.