Go-Ahead sees tough rail outlook

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The transport group behind nearly 30 per cent of all UK rail journeys warned today it expects economic conditions to hit profits at its train arm next year.

Go-Ahead, which runs the commuter lines Southern, Southeastern and London Midland through its 65 per cent owned Govia subsidiary, is also facing £6m of bid costs during a busy period for the re-letting of franchises.

The firm said it had performed well in the financial year due to end on June 30, with passenger revenues from its deregulated bus operations up by four per cent, helped by the stronger take-up of smart-cards.

In its rail division benefited from average regulated fare rises of six per cent at the start of this year.

London Midland’s record remains strong, with full-year expectations for a 13.5 per cent rise in revenues and eight per cent in usage, meaning it will not require revenue support from the Government despite it becoming eligible in November.

Referring to Southern, Go-Ahead said the economic climate was weaker than it expected at the time it bid for the franchise in 2009.

It added: “Looking ahead to the next financial year, we expect the performance of our bus business to remain strong.

“In rail, we expect slower than assumed economic growth rates to impact performance and, as stated in April, £6m of rail bid costs are forecast next year.”

Shares opened more than three per cent lower today.

The company is one of the UK’s largest bus operators with a fleet of around 4,000 vehicles carrying on average around 1.7 million passengers a day.