Britain’s biggest bus operator says it remains difficult to reliably estimate and forecast the effects of the Covid-19 situation on its business

 
Commercial sales at Stagecoach’s local regional bus operating companies are now at around 15% of “normal” levels

 
Stagecoach today offered an update on the impact that the Covid-19 outbreak is having on its business. But the Perth-based group said it was too early estimate the impact on the group’s financial position.

Stagecoach said it was helping with the national effort to deal with the COVID-19 crisis where it can, in addition to following government and public health advice across its operations.

Examples include providing an evening demand responsive transport service for NHS staff between their homes and NHS Raigmore hospital in Inverness; providing depot space to the London Ambulance service for commissioning new and recommissioning restored ambulances; operating NHS shuttle services in Mansfield, Hull and Grimsby; and providing additional bus services to key distribution and food manufacturing sites.

Since the group’s last statement on March 23:

  • Commercial sales at Stagecoach’s local regional bus operating companies are now at around 15% of “normal” levels. Vehicle mileage at those companies is now at around 50% of “normal” levels with plans to reduce that closer to 40% over the next week.
  • The group’s regional bus business has already furloughed a significant proportion of its staff as part of plans to furlough around 55% of its bus drivers and engineering staff. Other employees have also been furloughed.
  • Stagecoach is temporarily winding down its megabus.com inter-city coach services in England and Wales, and will suspend all such services by April 5.
  • The group has reduced its previously planned 2020/21 capital expenditure (£105m of cash capital expenditure and £38m of new leases). For the time being, its planned 2020/21 capital expenditure is limited to £40m of cash capital expenditure and £20m of new leases.

The respective governments have confirmed measures in each of England, Scotland and Wales to support the continuity of bus services. Stagecoach said that there measures would “reduce the risk of substantial ongoing operating losses”. The group has around £506m of available cash and undrawn, committed bank facilities.

Given the fast moving and extreme situation, it remains difficult to reliably estimate and forecast the effects of the COVID-19 situation on our regional bus income statement

Today’s Stagecoach Group statement said: “Given the fast moving and extreme situation, it remains difficult to reliably estimate and forecast the effects of the COVID-19 situation on our regional bus income statement. Forecasting is affected by the need for further information on the detail of the various arrangements with government, the challenges of forecasting passenger demand and staff sickness levels over the coming weeks, and the difficulty of definitively determining our ongoing cost base in such an extreme situation.”

Stagecoach is compiling its regional bus financial results for the four weeks ended March 28, 2020. During that four-week period, there were extreme and continual changes in passenger demand and significant cuts in mileage across our UK operations. The now announced support for English bus operators also has a bearing at this stage on the results for that period. In light of these factors, the group does not yet have a reliable estimate of the result for the period.

“Taking account of the government support confirmed, we do not expect the regional bus business to earn a profit for the time being and for the weeks ahead,” the statement said. “Subject to our comments on the challenges of forecasting at this time, we currently expect regional bus to operate at break-even or at a modest operating loss for the time being.”

No further dividends will be proposed in respect of the year ending May 2, 2020.

The sharp reduction in capital investment (down £65m cash capital expenditure and £18m of new leases) is bad news of Britain’s beleaguered bus builders. The remaining investment of £40m of cash capital expenditure and £20m of new leases reflects vehicles ordered which are either already built or largely built, vehicles required for new London bus contracts secured, electrical infrastructure work required for new London bus contracts secured, completion of some ongoing land and buildings work, and a reduced spend on technology and change projects.

We are continuing to work hard to ensure Stagecoach comes through this difficult period well placed for the significant long-term opportunities that we still see for public transport

Stagecoach chief executive Martin Griffiths said: “I am proud of the tremendous efforts and sacrifices of our people and the country’s healthcare workers during such a challenging and uncertain time. We are continuing to work hard to ensure Stagecoach comes through this difficult period well placed for the significant long-term opportunities that we still see for public transport.

“We would like to thank the respective governments and our local authority partners for their support through this very challenging period. It is welcome recognition of the importance of maintaining bus services at this time, and it will enable key workers to continue to travel to and from work, as well as ensuring communities can still access food, medical care and other essential services.”