Abellio could be stripped of the ScotRail franchise if performance levels do not improve, the Scottish Government has indicated.

The rail operator has been criticised over delays and cancellations following the introduction of a new timetable last month and was issued a formal warning on Christmas Eve, having failed to meet agreed targets.

The notice meant that ScotRail must submit a remedial plan outlining how it plans to address performance issues within eight weeks.

Speaking in Holyrood on Tuesday, transport secretary Michael Matheson said the decision to issue the notice was necessary after a breach of the company’s franchise agreement was identified on December 21.

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And Mr Matheson suggested that if Abellio fails to meet the aims which will be outlined within the plan, they could lose the ScotRail franchise.

“I very much regret the poor service that customers have experienced from ScotRail over recent months,” the minister said.

“There’s absolutely no lack of determination on my part to make sure that ScotRail keep up to the standards that we expect of them as is set out within the contract.

“A remedial plan is not something which you would issue just on the basis of a whim of some individual problems on limited occasions – this is because there has been a series of problems over a period of time that I don’t believe is acceptable.

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“We need to see the detail of their plan in order to consider that. There will then be a period of time which allows them to take that forward in order to make sure it’s delivering the agreed improvements that they’ve set out.

“Once that has been taken forward, we as a government will then be in a position to assess their performance and whether they’re actually delivering on their plan.

“Should they fail to do that and meet those necessary standards, that could ultimately result in them losing the franchise and they are aware of the potential implications that it has for them if they fail to deliver.”

Mr Matheson stated that although he deemed performance levels at ScotRail to be unacceptable, problems around infrastructure – the responsibility of Network Rail – proved a significant challenge and urged opposition parties to back calls from the SNP to devolve power over the body.

Scottish Labour has campaigned for rail to be renationalised and for the Scottish Government to end the Abellio contract early.

The party’s transport spokesman Colin Smyth said: “Months ago, in September, ScotRail’s performance plummeted to a level which breached their franchise agreement.

“Instead of taking decisive action to demand improvements, the cabinet secretary issued a waiver to ScotRail giving them a licence to continue to fail and, not surprisingly, performance got worse.

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“Last month, I challenged the cabinet secretary to stop bailing out ScotRail and start standing up for passengers by at least issuing a remedial notice against ScotRail and demanding a clear remedial plan.

“Again, the cabinet secretary refused to take action and even told Parliament on December 18, and I quote: ‘There are early signs of improvement.’ In truth, performance was continuing to get worse.”