A North-East rail and bus firm could be taking passengers all the way from Newcastle to Frankfurt on its group's trains within two years after snapping up an important London link.

Arriva yesterday announced it had bought rail firm Grand Central, which launched services between the capital and Sunderland in 2007, for an undisclosed fee.

When Sunderland based Arriva was bought by Deutsche Bahn last year Ulrich Homburg, head of the state-owned German transport firm's passenger transport division, said it would be a "nice vision" if passengers could use Arriva and its parent group's services all the way from the North-East to Germany.

Although Mr Homburg was addressing the possibility of his firm considering a bid for the East Coast franchise when it is returned to the private sector, with Arriva operating the Tyne and Wear Metro, yesterday's Grand Central deal and Deutsche Bahn bidding to run services from Kings Cross St Pancras through the Channel Tunnel and on to Frankfurt from 2013 that vision could now become a reality within two years.

Arriva, employing more than 47,000, already runs a number of rail franchises including CrossCountry, which has services from the North-East to the South-West, but not London, Arriva Trains Wales and Chiltern Railways.

Following yesterday's deal Grand Central, which is an open access operator meaning it receives no public subsidy, will continue to operate under its existing name and the same management team.

Tom Clift, managing director of the York based firm, which employs 125, will report directly to Bob Holland, Arriva UK Trains managing director.

Mr Clift said: "The decision by Arriva, one of Europe's largest transport undertakings, to acquire Grand Central is a huge vote of confidence in all our staff who have worked so hard over the last four years.

"Grand Central will remain a self-contained business with its own unique brand and identity. Our headquarters will continue to be based in York."

The firm, which also runs services from west Yorkshire to London made a loss of £8.4m last year, for which it blamed the challenging economic conditions and adverse winter weather, although it is yet to return a profit since being established.

An Arriva spokesman said there would be no cross over with its present routes.

He said: "Although they both run on part of the East Coast Mainline it is only over a short period and they don't actually both stop at the same stations.

"In the case of Grand Central it runs from Sunderland, Hartlepool, Eaglescliffe and Northallerton. They are not competing so there is no conflict there."

He added: "In terms of the commercial operations Grand Central will be a completely separate business. Grand Central is a brand that has got a good relationship with the passengers, people recognise and identify with it, particularly in that part of the North-East."

Mr Holland added: "Bringing Grand Central on board means we have a live open access operation up and running, one which is popular with customers and which we believe we can develop to become a key commercial part of our UK rail operations."