Arriva may seek Government aid in two years' time

Apr 23 2009 by Iain Laing, The Journal

BUS and rail operator Arriva has said its UK CrossCountry rail franchise may need Government support in two years’ time, due to slower revenues.

But the Sunderland firm said that although trading had been challenging so far this year, it had kept a tight control on costs, which had meant that “the business overall remains broadly in line with management expectations”.

The recession had hit the growth of passenger revenues on the CrossCountry train service and if this continued, the company said it would take up the revenue protection support available from the Government from 2011.

They were hit by bad February weather and not fully balanced out by stronger trading just before Easter. But trading at Arriva Trains Wales had managed to increase by 7.7% over the same period.

As well as running buses across the UK, Arriva runs the Arriva Trains Wales and CrossCountry franchises and buses and trains in continental Europe.

Its UK bus operations increased passenger revenue by 7.1% in the first 13 weeks of the year, compared with the same period a year ago.

Arriva said its financial position was robust, although funders’ lending potential was limited and it was choosing and pricing bus and rail tendering opportunities accordingly. “The group as a whole continues to grow, with a high proportion of revenue derived from medium and long term contracted business,” the statement said. “Our immediate focus is on ensuring the business meets the challenges posed by current economic conditions.

“Arriva continues to be well placed to take advantage of the long-term opportunities presented by the huge European public transport market.”

Last month the company reported a 30% climb in profits to £150m and said its diverse portfolio will protect it from the fall in turnover.

Meanwhile the group – which runs public transport in 12 European countries including the UK – said it is facing pressure from a £60m hike in fuel costs and slowing rail revenue growth, and is ready to take “contingency action” where it can.