Coronavirus: National Express slashes costs as passenger numbers slide
National Express will cut costs and stop all acquisition and capital expenditure programmes as coronavirus travel restrictions severely hurt passenger numbers.
Among other measures, executives across the group will take a pay deferral for the duration of the coronavirus outbreak.
National Express is particularly exposed to the recent travel restrictions imposed in Spain and Morocco.
Morocco’s travel lockdown has led to a 40 per cent reduction in revenue. And the declaration of a state of emergency in Spain has contributed to a 70 per cent drop in revenue there.
Shares in the coach operator crashed by a third yesterday as investors fled from travel stocks as governments locked down public transport.
Today Transport for London moved to close up to 40 Tube stations across the capital.
But National Express’s share price recovered by 9.4 per cent in early trading today to hit 98.6p.
The coach operator said it still anticipates a small, but positive, cash flow in the next few months, despite the dramatic fall in passenger numbers.
The group has taken “swift action to reduce service levels” and limited Spanish inter-city and regional services by 50 per cent.
Temporary staff lay-offs have seen around half moved onto the Spanish government’s income protection scheme. The government pays 70 per cent of employees’ salaries and companies are able to claim back the costs of those who did not enter the scheme when the outbreak is over.
National Express welcomed the UK government’s announcement of access to additional lines of credit and said it will only strengthen their position. Its UK business, which accounts for 22 per cent of group revenue, has seen a decline in revenue of around 20 per cent.
However, its school bus business in the US is performing better than expected. National Express said it had agreements in place for customers to pay either partially or in full for the service.
“As a highly diversified business, National Express Group is currently experiencing different impacts from Covid-19 across its portfolio,” the firm said.
“While there has been a significant decline in passenger numbers in recent weeks, globally National Express Group has taken decisive action and has contractual protections in place to help withstand the downturn.”
The coach operator said it “continues to reflect” on the payment of a final dividend in light of the circumstances. It said it would make a final decision on the dividend at its AGM on 7 May.
Chief executive Dean Finch said: “These are unprecedented times and have had an immediate and direct impact on our business. Nevertheless we are taking action everywhere to reduce our cost base, whilst both our contractual customers and governments are being very supportive.”
National Express traded strongly in the first two months of the year, with group revenue up 17 per cent compared to the prior year.