Go-Ahead to increase bus profits

The group currently generates an annual return of £70m from a fleet of around 4,600 buses carrying some 1.7 million passengers a day.

It said the new target would be achieved by the 2015/16 financial year through “high quality services, innovation and marketing and cost efficiency”.

In a meeting with City investors, chief executive David Brown said he believed there was “significant potential” to grow the bus part of the business.

It comes as Go-Ahead faces up to uncertainty in its rail operation following the Department for Transport’s decision to postpone current rail franchise competitions in the wake of the west coast mainline debacle.

Go-Ahead is behind a third of the UK’s rail journeys through its Govia joint venture, which runs the Southern, Southeastern and London Midland franchises.

Whilst the Olympics resulted in much higher levels of rail passenger revenues and journeys, the company said the profit impact was largely neutral.

In the deregulated bus division, underlying revenues were five per cent higher in the period between July 1 and October 17 after the number of passenger journeys increased by around three per cent.

This was after fares increased by between four per cent and seven per cent in April due to higher fuel costs and a cut in Government grants for bus operators.

The majority of its bus operations are in southern England, particularly commuter growth corridors where demand for public transport is strong. The company’s margin from bus operations is currently just over 10 per cent.