Stagecoach splashing out £71m on new fleet
Dec 6 2007 by Peter McCusker, The Journal
TRANSPORT group Stagecoach said it planned to spend £71m on new vehicles as it looks to attract more passengers to its bus division.
The orders for 584 new buses will be the biggest ever placed by the Perth-based company, which reported pre-tax profits of £84.6m in the six months to October 31 – an increase of 9% on a year earlier.
Stagecoach said increasing car congestion, inward migration and a growing focus on environmental issues had attracted more passengers to its services, including those run under its South Western trains franchise. It also operates 7,000 buses covering around 100 towns and cities in the UK.
Stagecoach said it had invested heavily in marketing bus travel, with an “encouraging” success rate in converting non-users to public transport.
Estimated passenger volumes in the six months were 3.9% higher than the same year period a year earlier, with full fare passenger growth at 2.4% and the remainder coming from concessionary travel schemes.
Revenues from bus operations lifted 8.1% to £367.1m, while operating profits lifted 54% to £52.5m as the company also benefited from stable year-on-year fuel prices and a continued focus on cost control.
Customers in both metropolitan and shire areas will benefit from the investment in new buses, which will take place in the 2008/09 financial year.
Stagecoach said it also made a strong start to its new 10-year South Western rail franchise, which includes the running of around 1,600 trains a day in south-east England out of London Waterloo.
Like-for-like revenues jumped 15.2% after a number of initiatives, such as 100 additional ticket officers and new vending machines, were introduced earlier than expected. The competitive bidding environment for new franchises knocked the company’s margins, although not by as much as initially feared.
Operating profits declined to £25.3m from £31.4m a year earlier, while Stagecoach also warned that the subsidy it receives from the Department of Transport will reduce by more than £100m over the next two financial years, resulting in some variability in profits over the franchise period.
Stagecoach recently took on the East Midlands rail franchise, with services running to London St Pancras and around the regional network. The company’s share of profits at Virgin Rail Group (VRG), in which it has a 49% holding, improved to £12.9m, from £9.2m a year earlier. VRG runs the West Coast Trains franchise and operated CrossCountry trains until last month.
