Stagecoach braced for long recovery period. Go-Ahead expects bus profits to plunge outside London. FirstGroup reveals details of government’s £254m support package for buses in England


Three UK passenger transport group statements published over the past week have shed light on how bus and rail businesses are performing during the coronavirus pandemic and the government support that is available to them.

In an update published by Stagecoach, Britain’s largest bus operator, this morning, the group’s chief executive Martin Griffiths said: “We see a lasting effect of the COVID-19 pandemic on travel patterns with an acceleration in trends of increased working from home, shopping from home, telemedicine and home education. We anticipate that it will be some time before demand for our public transport services returns to pre-COVID levels and we are planning for a number of scenarios.”

On a brighter note, he added: “At the same time, we see positive drivers for our business from a renewed societal focus on health, wellbeing and the environment. Public transport can play a major role in a cleaner, greener and more resilient economy and society, tackling climate change with strong government action to reduce car use.”

Perth-based Stagecoach was scheduled to published financial results for the year ended May 2, 2020, in late June, but this has been postponed until late July. Looking ahead, the group says that it is difficult to predict the impact of the COVID-19 situation on its financial performance. In the short-term, it says that the actions it has taken and the continuing support of government “should ensure we continue to generate [profits] and avoid significant operating losses”.

A trading update published by the Go-Ahead Group on May 22, the day before transport secretary Grant Shapps announced a further £254m of funding support for buses in England, offered revised profit forecasts for its bus and rail businesses.

Go-Ahead anticipates that its bus operations in England (excluding London) will deliver an operating profit in the range of £17m to £21m in the year to June 27, 2020. This is less than half of the £44.5m operating profit generated by these businesses in the previous year.

The resilient financial performance of Go-Ahead’s UK rail franchises has meanwhile been offset by losses incurred by its German rail operation, where there have been issues around availability of rolling stock and drivers. The group expects operating profit for the overall rail division to be in the range of £nil to £4m for the year ended June 27, 2020, compared £25.4m last year.

Go-Ahead still expects to generate overall group operating profits of between £63m and £75m for its current financial year, down from £121.1m. The vast majority of this will come from the group’s “robust” contracted bus businesses in London, Singapore and Ireland, where full-year profits are expected to be in the range of £46m and £50m (last year: £51.2m).

While none of us know what the coming months will bring, I have no doubt that public transport will continue to play a critical role in society, supporting our economies and tackling climate change long into the future

Group chief executive David Brown remains optimistic about the future. “While none of us know what the coming months will bring, I have no doubt that public transport will continue to play a critical role in society, supporting our economies and tackling climate change long into the future,” he said. “Go-Ahead has a strong track record of delivery, and with a high proportion of secured revenues we are well positioned to protect our business for the long term.”

A statement published by FirstGroup this morning meanwhile offered details on how the UK Government will provide the additional funding into the industry to increase bus service provision in England.

The Department for Transport’s new £254m ‘COVID-19 Bus Service Support Grant Restart’ programme builds on the £167m ‘COVID-19 Bus Services Support Grant’, which was announced on April 3.

The initial £167m was provided to support the provision of vital bus services in England over the 12 weeks between March 17 and June 8.

The new £254m programme will allow bus operators to increase bus service capacity as government guidance on travel restrictions begins to ease. It will run for an initial 12-week period backdated to May 12, is designed to support the industry while social distancing guidelines require buses to run substantially below their potential capacity.

According to FirstGroup, bus operators will be able to claim funding support for the difference between their revenue from passenger and other non-tendered contractual sources and the costs of operating the services. Recoverable costs under the programme include “all reasonable operational costs” as well as depreciation, pension funding and debt finance costs reasonably allocated to English local bus services.

Operators will be responsible for agreeing with local authorities the level of service to provide in each area to meet local demand for bus services as the lockdown restrictions ease.

The funding amount will be kept under review to ensure that increased services can be sustained while ensuring there is enough space for passengers to observe social distancing guidelines. Discussions are continuing between the UK Government and bus industry representatives regarding arrangements for the sector beyond the period covered by the latest arrangements.

The programme builds on previous commitments from the DfT, Scottish and Welsh Governments to continue to fund three important bus industry revenue streams – Bus Service Operators Grant, concessionary fares and contracts for tendered services – at levels prior to the pandemic.

Discussions are taking place with both the Scottish and Welsh governments to secure the additional funding necessary to support increases in bus service capacity through the recovery period.

This new funding will enable us to provide additional bus services that will deliver a progressive increase in capacity across our networks

Commenting on the new funding programme, Matthew Gregory, FirstGroup chief executive, said: “This new funding will enable us to provide additional bus services that will deliver a progressive increase in capacity across our networks, while maintaining the necessary distancing in line with government and public health authority guidance.

“Our bus services perform a unique and essential role in sustaining local economies and communities, and in delivering real improvements to air quality and congestion. As restrictions are gradually eased we will be ready to respond quickly to resume services that will reconnect people and re-open communities.

FirstGroup also listed some of the measures introduced by its First Bus subsidiary to support adherence to government guidelines, offering safe, socially distanced space across its bus fleet in England, Scotland and Wales.

Building on the passenger counting functionality announced last week, First Bus is introducing enhancements to the live tracking feature on its app by allowing customers to check in real time how full each bus is, helping them to make more informed travel decisions

The company continues to encourage cashless payments, and use of its app to purchase mTickets, to reduce the need for contact between passengers and drivers.

First Bus has also deployed seat signage to help ensure passengers are appropriately distanced from each other and has established enhanced cleaning protocols to help keep our passengers and employees safe. Further enhancements will be made to First Bus’s cleaning regimes during June, including the use of a virucide designed to provide protection for up to 30 days.

Get the latest news delivered to your inbox. CLICK HERE to subscribe to our e-newsletter.