PUBLIC transport group Go- Ahead plans to make profits of £100m a year by 2016 from running bus services in the UK.
The Newcastle-based firm’s 4,600 buses currently generate a return of £70m from the 1.7 million passengers they carry each day.
Chief executive David Brown set the ambitious target, which he aims to achieve by organic growth, “high quality services, innovation and marketing and cost efficiency”.
He said: “I am pleased to report strong growth across our regulated and deregulated bus businesses, demonstrating the effectiveness of the group’s strategy of providing high quality, cost efficient and locally focused bus services.
“We believe there is significant potential to grow this core part of our business and today announced a target to organically grow bus operating profit to £100m by 2015/2016. We remain committed to operating in the UK rail market and are pleased to report strong underlying growth in passenger revenue across our franchises.”
The concentration on bus profits comes as the group faces up to uncertainty in its rail operation following the Department for Transport’s (DfT) decision to postpone current rail franchise competitions in the wake of the West Coast mainline debacle.
Two reviews are underway into both the issues surrounding that competition and the wider awarding of franchises. Go-Ahead was on the shortlist to bid for the new Thameslink rail franchise in London but that is on hold as part of the review.
Brown said: “Following the DfT’s announcement regarding the postponement of current rail franchise competitions and a review of the franchising process, Go-Ahead looks forward to working with the review team to help shape the future of UK rail franchising.”
Go-Ahead already runs the Southern, Southeastern and London Midland franchises and although the London Olympics led to much higher levels of rail-passenger revenues and journeys, these will have a largely neutral effect on the group’s results.
However, in a trading update to investors, Go-Ahead said underlying bus revenues were up 5% since July after a 3% jump in passenger journeys.
Brown added: “Whilst we are encouraged by our performance in the first quarter, we remain suitably cautious about the medium-term wider economic outlook.”