Stagecoach’s buses boom, trains falter
RAIL and bus group Stagecoach said yesterday its full-year pre-tax profits were up 12.6 per cent to £196.4m on the back of a strong performance at its bus division.
But the group warned its UK rail division would make a huge loss in 2010 and 2111, if an ongoing row over who should foot the bill for losses at its South West Trains branch was not worked out with the government. The dispute has gone to arbitration.
The key point of contention is a deal in which the government agrees to pay a proportion of a franchisee’s losses if it fails to hit revenue targets.
Stagecoach believes the contract entitles it to revenue support calculated from April 2010, but the government believes the start date should be February 2011.
The firm’s finance director Martin Griffiths said it could be 20 per cent off the target revenue in the franchise, leaving a shortfall of between £70m and £100m to make up.
Griffiths added the dispute could take between 12 and15 months to resolve
Stagecoach said yesterday its rail arm was more sensitive to economic conditions and reported that profits fell to £55.7m from £59.1m a year ago.
Stagecoach chief executive Brian Souter added: “While our rail operations are more sensitive to the macroeconomic cycle, we have acted quickly to protect our businesses,”
Souter said: “We have delivered a major cost reduction programme at our rail franchises and are implementing measures to protect passenger revenue and attract new customers to the rail network.”
Stagecoach, which operates some 7,000 buses across the UK, owns Megabus, Oxford Tube coach service, the East Midlands train franchise and half of Virgin Rail.