West Yorkshire Combined Authority buys FirstGroup assets for £109m as franchise drive moves forwards
Public transport operator FirstGroup has agreed the sale of over 300 buses and five freehold depots to West Yorkshire Combined Authority (WYCA) for £109m, as plans to bring the region’s bus networks under public control move forwards.
The move comes as part of the region’s transition to a bus franchising system, led by West Yorkshire Mayor Tracy Brabin and the Combined Authority, which will see the bus network for the majority of services come under public control.
Through the scheme, the Combined Authority will manage the routes, frequencies and fares for the buses, with private firms given contracts to operate the routes.
Graham Sutherland, FirstGroup CEO said: "We are delighted to have reached an agreement with regards to the sale of our assets and secured these important franchise contracts.
“We look forward to drawing on our scale, expertise and strong operational track record to deliver high-quality, sustainable bus services in partnership with the West Yorkshire Combined Authority."
Through the deal, WYCA has purchased 251 diesel vehicles and 79 electric vehicles.
FirstGroup announced that the depot sales to WYCA had now completed, with the fleet sales set to occur as the three WYCA franchise tranches go live, currently planned for May 2027, January and October 2028.
First Bus will continue to run existing commercial bus routes up to the date of the franchise commencement at each depot, with the depots being leased to the group at a peppercorn rental rate.
FirstGroup will also undertake electrification of the Bradford and Huddersfield depots at WYCA's cost, prior to the start of franchising. This will include a comprehensive design, tendering and project management service. The Bramley depot has also already been partially electrified by the group.
As part of the franchising drive, FirstGroup has already been awarded two bus franchise contracts in Bramley and Huddersfield, where the group currently operates, as part of the first of three tranches of WYCA's franchise programme.
The contracts are due to commence in May 2027, with a core term of five years and an option to extend for a further two years.
FirstGroup said it anticipates combined annual revenues of around £40m from these contracts
Both contracts will operate across the wider West Yorkshire region with the Bramley contract covering the Leeds area, served by a fleet of diesel and electric buses. The Huddersfield contract will be served by a fleet of electric buses.
It was also announced in September that Transdev Blazefield was chosen to run services in Dewsbury.
Under the terms of the new franchise contracts, WYCA will own the depots and will purchase any electric buses with operators required to lease electric buses at a peppercorn lease cost for the duration of their contracts.
FirstGroup will retain ownership of the diesel fleet, valued at around £9m, to operate the Bramley contract throughout the franchise term, before transferring them to the successor operator at an agreed residual value.
FirstGroup said it anticipates a post-tax disposal gain of around £30m in relation to the completed depot sales.
It added that it also expects a roughly £10m cash flow benefit over the next two years from around 130 buses being moved to other parts of its group following the transition of the depots.