Arriva Trains has withdrawn from the bidding process to run rail services in Wales from 2018.
They were one of four transport companies in the running to take over the Wales network, which has been run by Arriva since 2003.
The announcement by the Welsh Government leaves just three remaining companies: KeolisAmey, MTR Corporation (Cymru) LTD and Abellio Rail Cymru.
Formal tenders are being invited from shortlisted firms by the end of 2017, with the new operator set to be appointed in 2018.
Whoever is successful will run the network and launch a new integrated transport network, The South Wales Metro.
A spokesperson said, “Arriva Rail Wales have notified Transport For Wales that they intend to withdraw from the bidding process for the next Wales and Borders rail franchise.”
“Arriva have been clear they have done this for their own commercial reasons”
“We would like to thank the company for their support and positive attitude since the procurement started and we will continue to work closely with the company to ensure that existing staff and customers are central to our transition planning over the next 12 months.”
“With final tenders due later this year, we have three companies with world-class credentials each putting their own, distinct case for how they will deliver the ambitious objectives we set, with the goal of delivering a step change in rail services for passengers across Wales and the Borders.”
Conservative AM Andrew RT Davies, opposition leader in the Welsh assembly, said Arriva’s tender withdrawal “raises serious questions over the Welsh Government’s engagement with the tender process”.
“We need absolute confidence from the Cabinet Secretary that he and his team are handling the tender process correctly… and that in the ensuing transition period rail users will not see a deterioration in service.” he said in a statement.
He continued: “I will be seeking to learn the exact date as to when Transport for Wales were first informed of Arriva’s withdrawal.
“The timing of the Cabinet Secretary’s announcement falls on a suspiciously auspicious period for the Welsh Government, who have developed a habit for burying bad news during recess.”