Govia Thameslink Railway (GTR), which runs the Southern rail service, has kept its franchise despite May's timetable failures; however it received a £15m fine and had its profits capped.
After a history of poor performance, transport secretary Chris Grayling revealed today: 'GTR will make no profit from its franchise in this financial year and looking ahead, we have also capped the amount of profit that the operator is able to make for the remainder of its franchise, which is due to expire in September 2021.'
He added that GTR would be forced to put £15m 'towards tangible improvements for passengers'.
'This is in addition to the £15m the operator has already contributed towards compensation for passengers since the May timetable disruption,' he added.
GTR has agreed to work with the rail user groups representing passengers of Thameslink, Southern and Great Northern, who will determine what improvements this package will fund.
The DfT argued that a termination of the franchise would only cause further and undue disruption.
This is the second time GTR has faced losing its franchise and been let off, after the ongoing arguments after the role of guards on trains and driver only operation saw the firm investigated by the DfT for breach of service responsibilities.
Mr Grayling added: 'Performance after the May timetable change was unacceptable. This action announced today holds GTR to account appropriately and will benefit passengers.'
Anthony Smith, chief executive of independent watchdog Transport Focus, said: 'This fine on Govia Thameslink Railway will take some of the sting out of the frustration many passengers have felt as a result of problems created by the timetable chaos and poor performance by the rail industry.
'It is good that those who have suffered should feel the benefit of the fine money rather than it simply going back into Government coffers with the focus on improving performance and disruption management.'