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Terror fears put brake on Stagecoach revenues

Published 27/04/2016

Stagecoach said the outlook for the rail industry was
Stagecoach said the outlook for the rail industry was "more challenging" than last year

Travel operator Stagecoach says terrorism fears and weak consumer confidence are putting rail revenues under pressure.

The FTSE 250 firm said the outlook for the rail industry is "more challenging" than last year as it feels the force of lower fuel prices, a slowdown in the UK economy and weaker earnings growth.

It said the UK rail division, which includes South West Trains and East Midlands Trains, saw like-for-like revenues grow by 2.5% in 48 weeks to April 2, reflecting a slowdown in revenues across the wider market.

Meanwhile, revenues at Virgin Trains East Coast and Virgin Rail Group's West Coast franchise rose 4.9% and 4.6% respectively.

Stagecoach said: "We believe the reduced rate of growth reflects the effects of weakening consumer confidence, increased terrorism concerns, sustained lower fuel prices, the related effects of car and air competition, slower UK GDP growth and slowing growth in real earnings.

" We have taken and will take further steps to mitigate the effects of lower revenue growth, focusing on cost control and additional initiatives to grow revenue."

Shares in the firm were down more than 4%.

The update comes after Stagecoach cut its full-year earnings forecast in December as it said rail and coach sales had been hit across the UK and continental Europe following the November terror attacks in Paris, which killed 130 people.

The travel industry has been shaken by a string of attacks in recent months in Brussels, Turkey, Tunisia and Egypt.

Thomson and First Choice owner TUI reported in March that UK holidaymakers were returning to old favourites including Spain and the Canaries after the attacks, while summer holidays to Turkey had fallen 40%.

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