Thursday 19 September 2019

Go-Ahead signals interest in FirstGroup’s bus arm as profits tumble

Go-Ahead revealed statutory pre-tax profits dropped by a third to £97 million for the year to June 29.

(Go-Ahead Group/PA)
(Go-Ahead Group/PA)

By Holly Williams, PA Deputy City Editor

The boss of transport giant Go-Ahead has signalled potential interest in rival FirstGroup’s under-review UK bus arm as he revealed rail woes sent annual earnings tumbling.

Speaking to the PA news agency, Go-Ahead chief executive David Brown said the group looks “at all opportunities that come along” and is in the market for buying bus businesses that need turning around.

While FirstGroup has not decided if it will sell its UK bus business, it has confirmed aims to separate out the division and is reviewing options for “structural alternatives”, including a sale.

Asked if Go-Ahead would be interested in FirstGroup’s bus business, Mr Brown said: “We consider all opportunities.

“We are in the business of buying businesses on the bus side that we can turn around.”

The company recently completed the takeover of the Queens Road bus depot in Manchester from FirstGroup, with 22 routes and 173 buses now running across the city.

Mr Brown’s comments come as Go-Ahead revealed statutory pre-tax profits dropped by a third to £97 million after rail earnings were knocked by the loss of the London Midland franchise.

The firm saw earnings in its rail arm plunge to £25.4 million in the year to June 29 from £44.5 million the previous year.

On an underlying basis, pre-tax profits were 7.6% lower at £113.8 million.

The group has suffered woes in its rail arm, with the loss of the London Midland franchise at the end of 2017, while the Government also recently scrapped the bidding process for the Southeastern rail franchise, currently run by Go-Ahead.

Mr Brown insisted the results were ahead of management expectations for bus and rail.

Bus earnings lifted 4.7% to £95.7 million, with regional bus operating profits surging 12.8%.

Full-year group revenues were also higher than expected, up 10% at £3.8 billion.

Mr Brown said while the rail arm was knocked by the London Midland loss, it had put behind it the strike woes that had impacted the Southern Railways franchise and last year’s timetable fiasco.

He said: “Everything is better than it was before.

“Our commitment to provide better services for our customers has delivered improvements in reliability and satisfaction in our bus and rail businesses, many of which reached record levels during the year.”

The group- which operates Govia Thameslink Railway (GTR) as a joint venture – cautioned it expects lower operating profits for its rail division in 2020, with a knock from the Southeastern operation offsetting “modest” profits due from GTR.

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