Stagecoach: No plans to bid for rail franchises as profits rise
The group’s rail operations are set to end in November after it was banned by the Government from bidding for new franchises.
Transport giant Stagecoach has said it does not plan to bid for more rail franchises after its operations end in November as it remains embroiled in a legal row with the Government.
The group said it would instead focus on bus and coach operations in the UK as it faces losing three key rail franchises.
The news came as it posted a 3.6% rise in full-year underlying profit to £132.9 million for the year to April 27.
On a statutory basis, profits jumped 30% to £101.2 million.
Stagecoach is losing three rail franchises – including East Midlands and the West Coast Main Line, which it operates with Virgin – after the Department for Transport (DfT) banned it from bidding unless it took on hefty pensions liabilities.
It has launched legal action against the Government over the decision.
Its rail operations are set to end in November, bringing to a close more than 20 years in the sector.
Stagecoach chief executive Martin Griffiths said: “We continue to focus on driving growth at our core high-quality bus and coach operations in the UK, but we have no intention to bid for new UK rail franchises on the current risk profile offered by the Department for Transport.”
Shares fell more than 2% after the results.
Its bids to renew existing rail franchises with partners were disqualified over pension responsibility concerns.
Bosses were told by officials that they could not submit a bid unless they were willing to take on potentially huge pensions liabilities, which is unviable, the company claims.
Stagecoach said in May the DfT was forcing bidders to take on pension liabilities that could be more than £1 billion.
The firm said it refuses to accept the potential pension risks.
Its full-year figures showed UK rail revenues made up nearly a third of group revenues, but plunged 62% to £589.5 million.
Regional bus revenues lifted 2.9% to £1 billion, while London bus revenues rose 0.4% to £252.8 million.
Gerald Khoo, a transport analyst at Liberum, said: “Modest growth in regional bus was encouraging, although the much smaller London bus division remains under pressure.
“Rail performed well, but the group is likely to be out of the industry within the year.”