Profits dip at Go-Ahead despite record bus performance

Sep 3 2009 By Karen Dent, The Journal

RECORD results in its bus division helped boost income for public transport giant Go-Ahead but couldn’t stop the Newcastle company suffering a hefty fall in profits.

Go-Ahead, which also runs trains and handles cargo and car parking at 15 airports, reported a £147m rise in revenue to £2,346.1m for the year to June 27.

But profits across the whole group were down by 15% to £112.1m. They were slightly better than industry experts had expected after the bus division made record profits of £66.2m.

Chairman Sir Patrick Brown said: “The effects of the economic downturn during the past 12 months have demanded exceptional effort to stay on track. We have achieved that and have delivered a good set of results as a consequence.

“We believe we are well paced for the year ahead, although we continue to assume economic conditions in the UK will remain difficult over the next 12 months.”

Go-Ahead carries around 1.6m bus passengers every day on six bus companies in the North East - the region is the biggest user of buses per head of population -  London, the South and Midlands. It recently snapped up East Thames Buses in London for £5m and paid the same amount for rival Arriva’s buses in Horsham, West Sussex.

The record-breaking bus performance came despite a £10m rise in the fuel bill for the 3,500-strong fleet which carries around 1.6 million people a day. Pension and accident claim costs were also up, although the division made around £2.5m in cost savings.

Income from Go-Ahead’s three rail franchises -  Southern, Southeastern and London Midland - also continued to grow but at a slower rate in the second half of the year. The company’s jointly-owned Govia subsidiary, which runs the services, won the franchise to run the Southern Central franchise in London and the South coast earlier this year.

Go-Ahead admitted it does not expect any “significant” rail growth over the next 12 months as passenger demand slides as a result of the recession. It has already cut 300 jobs in its South East rail business in the last year.

Its aviation services, which run at 15 airports and work with airlines including BA and Virgin, made an operating loss of £4.5m dropping from a profit of £1.5m the previous year.

Go-Ahead is restructuring this part of the business and has already pulled out of Dublin Airport, with the loss of 70-80 jobs, and has cut 450 posts in baggage handling as the struggling economy hits demand for air travel.

Around 27,500 people work across the whole Go-Ahead group.