Mr McLoughlin told MPs plans were continuing for an interim contract with Virgin to operate for up to 14 months while the franchise process was rerun.
He said passengers would see the same staff on the same trains and the service would be "enhanced":
In dealing with this, my department has been frank and open about its mistakes and is absolutely determined to find out exactly what happened.
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An ejector seat manufacturer is to be prosecuted over the death of Red Arrows pilot Sean Cunningham at RAF Scampton in November 2011.
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