Profits speed ahead
Mar 7 2008 by Karen Dent, The Journal
TRANSPORT group Arriva has driven up its profits despite high fuel prices and the cost of bidding for three UK rail franchises.
The Sunderland-based bus and rail company, which operates public transport businesses across Europe, says it absorbed those extra costs to increase its annual revenues by 16% to £2bn in 2007. Its order book grew by 79% to £12bn last year, with its European order book rising by 18% to £4bn.
Arriva, which employs almost 40,000 people worldwide, is currently concentrating its UK attention on the CrossCountry rail franchise. It won the route from Virgin last year and began running trains on the 1,600 miles of track from Aberdeen to Penzance, including Newcastle, Durham and Darlington, in November.
Arriva communications director Simon Craven said: “The biggest thing that affects the North East is that this is the first full year of CrossCountry. It is the single largest contract we’ve ever won. It’s a very large and complex contract. It’s important that it gets off to a smooth start. There has already been a significant improvement in punctuality compared to the same period last year.”
Planned innovations to attract more passengers will include booking seats while the train is running and offering discounted tickets closer to the time of departure. Arriva expects annual revenues of around £600m from CrossCountry.
In addition to the costs of bidding to expand its UK rail interests, the group was hit by an extra £8m bill for fuel costs last year. However, this will not be an issue is 2008, according to Craven.
“We have fixed our fuel prices,” he said. “We buy ahead for 12-15 months.”
In addition to the UK, Arriva operates in nine European countries. It is aiming to double the size of its mainland Europe business from its 2006 level within the next three years.
Arriva highlights
* 16% rise in annual revenue to £2bn.
* 7% increase in operating profit to £128m.
* 79% rise in order book to £12bn.
