The Interview: Moir Lockhead, Chief Executive, Firstgroup

Moir Lockhead, the chief executive of the bus and rail operator FirstGroup, is in Portugal this weekend. Not, like half the country seemingly, to watch the England-France game in Lisbon but for a spot of R&R in the Algarve. He probably wouldn't be there either had he known in advance about the good bit of news he was about to get from the Strategic Rail Authority. First was yesterday named as preferred bidder to run Scotrail, which operates all the commuter and regional railways north of the border.

Moir Lockhead, the chief executive of the bus and rail operator FirstGroup, is in Portugal this weekend. Not, like half the country seemingly, to watch the England-France game in Lisbon but for a spot of R&R in the Algarve. He probably wouldn't be there either had he known in advance about the good bit of news he was about to get from the Strategic Rail Authority. First was yesterday named as preferred bidder to run Scotrail, which operates all the commuter and regional railways north of the border.

"We thought the decision would be held off until after the announcement of the Government's rail review in July, so it did come as a surprise," he says as he strolls in the Portuguese sunshine. "But we are delighted, of course, with the outcome. The job now is to make sure we deliver a better quality of service year on year. We have done it with the other railways we operate so I've no reason to think we can't do it in Scotland."

In fact, First is on something of a roll, having won three of the last four rail franchises it has bid for. Suddenly the SRA chairman Richard Bowker could not be a nicer chap, according to the First boss. It was not like that a year ago when he was kicked off the bidding for the Greater Anglia franchise. "Incredible," he said at the time.

"I wonder what you have to do to get the SRA to take the railways seriously when they can discriminate against an existing operator in this way and favour a bidder who has never run a rail service in Anglia."

Now, you would be hard pressed to get a season ticket between him and Mr Bowker. "I think our relationship with the SRA is now as good as it has ever been. We did have a difficult time but that is in the past. The fact we are bidding and winning franchises proves the point," he says.

In fact, so complete is the rapprochement, that he is probably the only chief executive in the industry who doesn't think that Mr Bowker and the SRA will be toast once the rail review is complete. "I don't know whether the final structure will have an SRA or not. I wouldn't write it off at all," he says.

Warming to the theme, he goes on: "The objective of the review is to de-layer the Government's approach to the railways and create a transparent structure which allows them to see where the money is being spent. It is exactly the right time to be doing that. It is 10 years since the industry was privatised and it's time to have another look and make improvements without throwing the whole thing up in the air. It's an opportunity for both us and the Government to put right some of the things we are not very happy with."

With his bushy eyebrows, square set jaw and sturdy frame, he can look not a little fearsome, thuggish even, as you would perhaps expect of a man who left school at 15 and began his career in transport as an apprentice at the local bus garage in Darlington.

But age (and seven grandchildren) seem to have mellowed him and today there is not much that he seems unhappy with. First's North American school bus business is starting to fire on all cylinders and its UK bus business is reaping the benefits of congestion charging. Next comes a revolutionary new vehicle, a cross between a bus and a tram, which First plans to test initially in Yorkshire.

But it is the Scotrail win which has given him most pleasure because it allows First to co-ordinate all its bus routes in Scotland with train services. There was the small matter of a Competition Commission inquiry to negotiate but that was successfully completed two months ago.

"That proved that the real competition is not between bus and rail services but between public transport and private cars," he says. "The Government's 10-year plan also proposed that if you integrate buses and trains and make public transport more attractive, then people might just leave their cars at home. It has taken all this time to prove that is the case."

The 10-year Scotrail franchise makes up for the disappointment of losing Greater Anglia but his train set is not yet complete and First is also bidding for the East Coast Main Line, the new Integrated Kent and Northern franchises. "We would like to get a good balanced portfolio between intercity, commuter and regional railways. If we end up with four big franchises I would be very pleased with that," he says.

"This is still an industry worth being in and there are signs it is getting better. We can demonstrate now that whilst performance is nowhere near where we want it to be it is a damn sight better than it was two years ago. On Great Western [which runs intercity services out of Paddington] we are now back to the best performance we have had in four years - it is back to pre-Hatfield levels and we are seeing volume growth.

"Overall performance is getting better, Network Rail and the train operators are getting control over costs so I think you will see continuous improvement and there are more new trains coming in than ever before."

So not time, just yet, to hang up his boots? "No not at all. Somebody asked me that and I replied that when I looked or felt as old as they did then I would be tempted but not before. I am enjoying it very much."

With that it is back to the attractions of the Algarve coast. And if England do well against the French tomorrow? "Maybe I'll come next week and see them against Croatia."

First among equals

Age: 59

Pay: £575,000

Lives: On a farm near Aberdeen

Career: Left school at 15 to become apprentice mechanic in a bus garage in Darlington. Short period as management trainee with Tarmac. Joined bus company Grampian Transport in 1985 as general manager. Led buyout of Grampian in 1989, floated it in 1994 and merged it to create First in 1995. Company now carries 4 million passengers a day and is UK's largest bus company and second largest rail operator and second largest operator of school buses in America. Annual revenues of £2.5bn.

Other interests: Breeding Highland cattle. Watching sport.