Firstgroup signals bus overhaul

FIRSTGROUP put more of its bus services on the block today after admitting fuel costs, lower demand and reduced subsidies were hurting the division.

The Aberdeen-based transport group will accelerate its programme of disposals, which has already seen it offload operations in North Devon and King’s Lynn and a number of other depots, in order to protect profitability.

It warned conditions for urban services in Scotland and the North of England were particularly harsh and that cost efficiencies would not be sufficient to offset the impact of reduced government subsidies and fuel costs.

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Bus operating profits fell nearly 10 per cent to £134.4m in the year to March 31 while the operating margin of 11.6 per cent is expected to fall to 8 per cent this year.

FirstGroup, which is the UK’s biggest bus operator, said other divisions including UK rail and Greyhound coaches in the US were performing well as it recorded pre-tax profits of £271.4m, down one per cent on a year earlier.

Chief executive Tim O’Toole said a new management team was working on a plan to stimulate growth in the bus business, including £160m of investment in 1,000 new vehicles and £4 million refurbishment of mid-life vehicles.

It is also investing £27m in new ticketing technology, including a “touch-in, touch out” contactless payment system using bank cards.

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Mr O’Toole said: “We have a very strong platform to grow in UK bus. The vast majority of our bus operations generate good growth and returns with opportunities to grow further.

“However, there is scope to reposition our portfolio to concentrate on those areas with the greatest potential.”

FirstGroup has around 8,000 buses operating in 40 towns and cities across the UK, carrying 2.5 million passengers every day.