Transport operator Stagecoach (SGC) has been banned from bidding on three rail franchises by the Department for Transport (DfT) after failing to meet pension rules, causing the shares to fall 3.8% to 128.2p.
As well as the newly revamped InterCity West Coast franchise that will include High Speed 2 operation when opens, Stagecoach bids have also been discounted from the East Midlands and South East franchises.
Bidders for the franchises were asked to bear the full long-term funding risk on relevant sections of the Railways Pension Scheme, Stagecoach told investors.
Mr Griffiths said he was "extremely concerned" at the DfT's decision, given that it had "full knowledge of these bids for a lengthy period".
Despite this, the DfT insists that it was just Stagecoach which had changed the terms of the franchise competition, leading to a bid "which proposed a significantly different deal to the ones on offer".
The rail and bus company has been verbally informed by the DfT that irregularity in filling a gap in the pension plans for United Kingdom railway employees has been behind the move to ban them from 3 now ongoing franchise bids, including Virgin's InterCity West Coast franchise.
The Pensions Regulator has estimated the United Kingdom rail industry needs an additional £5-6bn to plug the pensions shortfall, and the company said it was being asked to take on risks it "cannot control and manage".
Analysis shows 60 per cent of rail journeys will be on trains operated by overseas companies or governments once Abellio starts running the East Midlands route.
The Government is investing more than £1.5bn upgrading the Midland Main Line, which runs between London and Sheffield, and recently announced a "root-and-branch" review of the UK's railways.
"The new franchise includes exciting plans to improve passenger comfort, seat numbers, free wifi, more auto and cycle parking and new trains, including trialling hydrogen-powered stock".
He said they were considering an appeal but added: "I am devastated for the teams who have worked tirelessly to make Virgin Trains one of the best train companies in the United Kingdom, if not the world".
Martin Griffiths, Stagecoach Group chief executive, said he was shocked at the DfT rejection of its bid, adding he was requesting a meeting with the DfT.
"We've led the industry for more than 20 years with our ground-breaking innovations, such as automatic delay repay, and award-winning customer service".
"Stagecoach have played an important role in our railways and we hope they will continue to do so post the conclusions of the Rail Review".
Stagecoach, which also has a huge bus division, now operates the East Midlands rail franchise between London St Pancras International and destinations including Leicester, Derby, Sheffield, Nottingham, Manchester and Liverpool.
The cross-country trains that now link Norwich with Peterborough, Nottingham, Sheffield, Manchester and Liverpool will all be replaced during the eight-year franchise - but a spokesman for Abellio said it was not possible to give details of the new rolling stock at this stage.
Stagecoach shares were down almost 2% in morning trade at 130.9p.