Capture of the new Thameslink Southern Great Northern rail franchise will see Go-Ahead examine options for expansion of its bus business

Go-Ahead is set to consider options for additional investment in its bus business and acquisitions following the Department for Transport’s announcement that its Govia joint venture with Keolis will operate the new Thameslink Southern Great Northern franchise.

Initially, Govia will take over the First Capital Connect franchise in September. It will then merge the business with Govia’s existing Southern franchise in July 2015 as well as Southeastern services which use the Thameslink route core.

Profits from the new franchise are forecast to be £33m in the first year the combined franchise operates. Go-Ahead’s share will be £22m. The company also pointed out that it is targeting a similar boost to its profits from its objective to achieve £100m of profit from its bus operations in 2015/16.

As well as examining whether to invest in existing and new bus operations, Go-Ahead will also consider whether the TSGN franchise profits should be used to increase dividend payments to shareholders.

“We are in a good position, flexible and will consider our options in due course,” finance director Keith Down said.

The TSGN contract will run for seven years until 2021. It is understood that Go-Ahead beat off competition from FirstGroup after the incumbent operators were selected as the final two companies in the running for the contract from the shortlist of five bidders. The other three companies competing were Stagecoach, Abellio and Hong Kong’s MTR.

 

This article appears inside the latest issue of Passenger Transport.

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