Operators boosted by switch to public transport

Both reported rising ticket sales as people avoid the high cost of running their cars.

Underlying revenues at Stagecoach’s UK rail business grew 8.7 per cent in the 24 weeks to October 16, while Virgin Rail Group, a joint venture in which Stagecoach owns 49 per cent, reported a 9.7 per cent sales jump in the same period.

National Express said third-quarter revenues at its UK rail division rose six per cent.

The company reported a noticeable rise in weekend passengers travelling on what are traditionally commuter-driven routes.

Dean Finch, National Express’s chief executive, said: “We have delivered good revenue growth and further improvements in efficiency and we have clear plans to continue to improve revenue and profitability in the future.”

The group, which serves most towns and cities in Yorkshire, said that 300,000 passengers signed up for a deal to travel anywhere in the UK by coach for £9 over the summer.

The promotion, which was available to passengers booking one-way and 14 days in advance, helped the company’s coach revenues to increase by six per cent in the three months to September.

Stagecoach said it is on course to meet full-year expectations as it reported revenue growth across all divisions including UK bus and rail.

Public transport operators have enjoyed an increase in passenger numbers as household incomes are squeezed and travellers seek cheaper methods of travel amid higher petrol prices.

National Express said coach revenues rose six per cent in the period, driven by UK performance and the Eurolines brand.

The company’s group revenues overall rose by five per cent, with the school buses business in North America posting 10 per cent growth while sales in Spain rose by seven per cent.

Gert Zonneveld, analyst at Panmure Gordon, said National Express had enjoyed a good trading period.

“The full year outlook remains good with the expectation of a significant increase in the financial performance of the group,” he said.

Stagecoach said revenues at its UK bus division, which runs major bus operations in cities such as Sheffield and Hull as well as the Sheffield Supertram, rose 2.2 per cent during the 24 weeks to October 16 on a like-for-like basis.

Rail revenues rose by 8.7 per cent.

Last week rival transport group Go-Ahead said an increase in new passengers looking to avoid the high cost of running their cars had helped boost first-quarter trading.

Analysts said there are no signs that transport groups will feel the pinch from an expected economic downturn.

Deutsche Bank analyst Geoff van Klaveren said: “There aren’t any signs of a slowdown despite macroeconomic weakness. As with Stagecoach, the underlying strength of the National Express business looks strong.”

National Express was stripped of the East Coast rail route by the Government in 2009, but said it would re-bid for its London to Essex C2C franchise, which expires in 2013.

Sales at National Express’s UK bus business grew by two per cent.

Stagecoach said its US coaches operation posted a 12 per cent leap in like-for-like revenues in the five months to September 30, while third-quarter revenues at National Express’s America school bus business rose 10 per cent.

Analyst Karl Burns, at Shore Capital, said of Stagecoach: “We retain our ‘buy’ recommendation and highlight the potential upside from new rail franchises, notably the West Coast. In addition there is growth potential from North America and resilience in UK bus.”

Talking about National Express, Mr Burns said: “We retain our ‘hold’ recommendation, highlighting that National Express is almost at the end of its recovery phase and, whilst growth rates remain strong in Spain and North America, we remain cautious on the outlook given the deteriorating economic backdrop.”

Yesterday the Competition Commission said its investigations showed that three unidentified bus companies had engaged in anti-competitive behaviour to protect core areas of business in northeast England.

The regulator previously said the UK bus market should be opened up.

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