FirstGroup in talks over extending TransPennine franchise

The transport giant today told shareholders its UK rail operations grew strongly in its first quarter, as the soaring cost of fuel prompts cash-strapped motorists to consider public transport.

The bus and rail operator added that overall its business is performing in line with expectations.

FirstGroup said underlying sales in its rail business rose 8.5 per cent during the period from April 1 to June 30, while its UK bus division saw a 0.7 per cent increase in like-for-like sales.

UK public transport operators have seen an uplift in passenger numbers in recent months as fuel inflation forces many motorists to turn to buses and trains.

“I am pleased to report trading during the first quarter of the new financial year is in line with our expectations,” said chief executive Tim O’Toole.

“We are encouraged by improving trends in UK rail and Greyhound and the continued steady performance in UK bus and First Transit.”

FirstGroup recently said it would not take up the option to extend its key First Great Western franchise for three years beyond 2013 so it can bid for a longer-term deal.

The TransPennine Express franchise runs until 2012, and links Hull, Leeds and York with Manchester and Liverpool. FirstGroup said it is in talks with the Department for Transport over extending the franchise.

In North America, where FirstGroup is the biggest operator of yellow school buses, the firm said pressure on margins in its school division would continue into the first half of its financial year but its recovery programme for the unit was going to plan.

The company’s Greyhound bus business in the US grew underlying sales by 3.7 per cent in the first quarter, up from 1.6 per cent during the three months before, added the company.