Go-Ahead sees more on the trains

But the company remains cautious for the next six months despite pushing through inflation-busting price hikes in January.

The firm said revenues at Southeastern and Southern were up by 6 per cent and at London Midland by 7 per cent in the second half of 2010.

It now expects first half operating profits to be in line with the same period last year when it made 19.9m, whereas it had previously forecast a drop in profits in the period.

Go-Ahead said the improvement reflected the performance of its rail division, largely due to procurement savings.

Rail providers across the UK are putting prices up by an average of 6.2 per cent in January as part of the Government's plans to invest in the network. Some fares at Southeastern are going up by as much as 12.8 per cent.

The firm, which runs its rail services in a joint-venture with French company Keolis, said passenger numbers were up 4 per cent at Southern and London Midland.

Revenues rose at Southeastern as a result of high speed services connecting parts of Kent with London, which started a year ago.

The Government allowed train operating companies to raise regulated fares, which include season tickets, in 2011 by 5.8 per cent – one percentage point above retail price inflation of 4.8 per cent.

Southeastern was allowed to raise its prices by 7.8 per cent, or three percentage points above the inflation rate.

Its bus division also put in a solid performance and should make better operating profits than last year.