Fuel prices boost Go-Ahead demand

Newcastle-based Go-Ahead, which has a fleet of 3,800 buses and is part of a joint venture responsible for Southern, Southeastern and London Midland rail services, said it had seen “impressive growth” across all its businesses.

Chief executive Keith Ludeman said: “The public is struggling with the current high levels of fuel pricing and many are now choosing the better value alternative of the bus.”

He added that growth on rail commuter services suggested that employment levels and demand for leisure trips in the capital remained robust.

Marketing campaigns and initiatives such as smartcard ticketing have also helped drive demand as Go-Ahead forecast that its profits for the year to July will be stronger than it had previously expected.

In the most recent quarter, Go-Ahead said passenger numbers on its deregulated bus services jumped by 7.2%, leading to an 8.3% rise in underlying revenues.

While it has seen an increase in fare-paying passengers due to the cost of petrol, it has hedged its own fuel requirements for the current and next financial year at an average of 41p per litre.

The company’s bus services include Metrobus in Sussex, Plymouth Citybus and the Oxford Bus Company.

Passenger numbers in rail were up by 5.8% after growth of 7.6% at Southeastern and a 2.3% increase for Southern. London Midland saw growth of 11%.

Go-Ahead shares jumped more than 7% following today’s update.

Investec Securities said it expected to increase its profits forecast by £7 million to £90 million.

Despite the upgrade, Mr Ludeman sounded a note of caution: “While there is much to be positive about in today’s trading update, we continue to remain cautious about the medium term prospects for the wider economy.”