Mobico Group’s woes continues after it reveals a loss of £793m, sale of American school bus business and the departure of CEO Ignacio Garat

 
School bus business sold to Arriva parent I Squared Capital

 
Mobico chief executive Ignacio Garat stepped down suddenly this week, marking the second senior departure in recent months.

The move comes shortly after Mobico’s former CEO and current chair designate, Phil White, was appointed as executive chair as the group’s board begins the search for Garat’s successor.

Garat, who joined the group in 2020, will transition into an advisory role for a three-month handover period. His departure follows a turbulent few years for Mobico – formerly known as National Express Group – including the unexpected and unannounced exit of UK and Germany chief executive Alex Jensen earlier this year after just 18 months in the role.

The leadership reshuffle was announced alongside Mobico’s full-year results for 2024, which showed a statutory operating loss after tax of £793.8m. The loss was driven by non-cash items, including a goodwill impairment of the group’s North America school bus business and the write-off of deferred tax assets in both the UK and North America.

Adjusted operating profit rose by 11.3% to £187.7m, in line with guidance, while group revenue increased 8.3% on an organic, constant currency basis. However, these gains were overshadowed by the heavy statutory loss and further restructuring costs.

Mobico also confirmed this week the sale of its school bus division to Arriva owner I Squared Capital, for an enterprise value of up to £454m. The company expects net upfront proceeds of £272–287m from the transaction. The sale forms part of a broader strategy to reduce net debt and streamline the group’s operations.

Phil White, who previously led NEG from 1997 to 2006, will temporarily take the reins as executive chair. “We must now focus on building a business that is fit for the future,” he said. “My priorities will be to accelerate the pace of operational and financial improvements, appoint a CEO for Mobico’s next chapter, and to ensure the value inherent in the group’s portfolio is better reflected.”

We must now focus on building a business that is fit for the future

Despite operational challenges, Mobico’s ALSA division delivered another record year, with 13.9% revenue growth and operating profits of £178m, while its WeDriveU business in North America also expanded.

Mobico’s UK operations reported turnover of £623m in 2024, a modest increase of 2.1% on the previous year, but adjusted operating profit fell sharply by 72.3% to £6.5m. UK Bus revenue rose 7.9%, bolstered by fare increases in 2023 and 2024 – the first since 2017 – as well as improved performance following the resolution of long-running industrial action.

Despite cost pressures from new electric vehicle leases and inflation, operational efficiencies, higher fare income, and reduced overheads helped stabilise profits. The business also secured a new funding agreement with Transport for West Midlands for 2025 amid ongoing discussions around potential bus franchising in the region.

National Express-branded coach performance in the UK remained under pressure, with only marginal revenue growth. There was also a notable year-on-year profit decline, largely due to the absence of rail strike-related gains seen in 2023.

While yield improved and core routes to airports such as Stansted and Dublin were retained, passenger numbers dropped by 4.2% due in part to increased competition, particularly from German upstart brand FlixBus in the UK, and a deliberate reduction in service capacity.

Route optimisation measures and cost efficiencies began to deliver benefits in the second half of the year, and the National Express Transport Solutions coach business cut losses by £5m, although it has yet to return to profitability.

The group’s German rail operations faced another challenging year, with revenue falling by 1.3% to £256.5m and an adjusted operating loss of £9.3m. The group said the German business continues to be heavily impacted by sector-wide issues, including worsening infrastructure reliability, increased maintenance works, and an acute driver shortage, all contributing to elevated train cancellations and performance penalties.

An £87m charge was also taken to increase onerous contract provisions for the RRX1 and RRX2/3 contracts, reflecting the further deterioration in their projected profitability.

While passenger numbers benefitted from the German Federal Government’s cheap monthly ticket scheme, overall revenue declined due to reduced net subsidies and continued operational disruption.

 
This article appears in the latest issue of Passenger Transport.

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