Buses to rescue as trains prove drag on Stagecoach

The company, headed by founder and chief executive Sir Brian Souter, blamed the 44 per cent drop in rail profits for the year to April 30 on losses at East Midlands Trains in the first half of the period.

The division, which also includes South West Trains, grew revenues by 6.6 per cent to £1.14bn but the performance was below hopes at the time the franchises were awarded and was outstripped by growth in premium payments to the Department of Transport.

The rail decline was offset by a 6.3 per cent improvement in UK regional bus profits to £162.7m as Stagecoach reported underlying profits of £202.5m for the year, compared with £205.7m a year earlier.

Around 2.5 million passengers travel on Stagecoach’s 7,700 buses every day, generating revenues of £909.7m in the regions and £230.5m in London. The company also operates 1,900 buses and coaches in the US and Canada, including through its budget service megabus.com.

Stagecoach’s bus services in Yorkshire cover Hull, Sheffield, Barnsley, Rotherham, Huddersfield, Doncaster, Pontefract and Wakefield and employ more than 1,300 staff. The group also runs the Sheffield Supertram, which carries about 15 million passengers annually, employs 285 staff and runs 25 trams.

Stagecoach chairman Sir George Mathewson said: “High fuel prices and motoring conditions have resulted in commuters, business customers and leisure travellers switching from the car and airlines to our better value bus, coach and rail services.”

North America is the fastest-growing division in the group after increasing like-for-like revenues by 14 per cent on the back of demand for cut-price travel.

The megabus service expanded into the south east of the United States during the financial year and now covers around 90 key cities. Its Texas network started operating services last week and the expansion will be fuelled by May’s agreement to acquire certain businesses from Coach America.

While the rail division saw a drop in profits to £27.1m, Stagecoach said the business was now less sensitive to economic conditions because of the availability of revenue support at East Midland Trains. Stagecoach has been selected as a shortlisted bidder for each of Great Western and Thameslink as part of the latest round of rail franchising.

Its joint venture with Virgin Group grew like-for-like revenues from the West Coast franchise by 8.5 per cent in the year to April 30. The service achieved an improved punctuality average of 85.4 per cent in May but it said this was still below an acceptable standard.