First Rail passenger growth slows in the first half of 2016
First Rail’s year-on-year passenger growth has slowed to 0.7%, reflecting a slowdown seen across the UK rail industry, FirstGroup announced in its half-yearly results.
First Rail revenues declined to £595.8m in the first half of 2016, compared with £608.9m the previous year, with passenger volumes also decreasing by 0.1%.
The results are thought to reflect recent “challenging trading conditions” for rail in the UK due to the macroeconomic uncertainty caused by Brexit, one-off events and sustained lower fuel prices. FirstGroup stated that the results were particularly exacerbated by the extensive infrastructure upgrade recently taking place across its Great Western Railway (GWR) franchise.
Commenting on the results, FirstGroup’s chief executive, Tim O'Toole, said: “Our overall trading performance as outlined at the start of the financial year continued during the first half, with encouraging performances by our North American business partially offset by tough trading conditions for our UK bus and rail operations.
“In the second half we will benefit from our normal seasonal bias as well as our ongoing focus on executing our strategy. We continue to expect good progress for the Group in the current year, recognising we will likely ... face uncertain economic conditions in the UK for the foreseeable future following the EU Referendum result.”
Although the results may be superficially disappointing to First, the report offered assurances that the dip in passenger growth was offset by reduced subsidy receipts and the remapping of routes outside of First’s TransPennine Express (TPE) franchise, which commenced in April of this year. It also noted a substantial reduction of £108.3m in its usual seasonal cash outflow, boding well for the rest of the financial year.
The report stressed that the recent upgrade works on GWR have exaggerated the impact of these factors, and that revenue performance for TPE has actually been better than the industry average in the period.
It emphasised the many successes of FirstGroup during the half-year from 30 March to 30 September, including the successful launch of the new TPE franchise, several other launches of new rolling stock and a number of changes to Network Rail’s infrastructure upgrade plans.
The report also heralded improved customer service ratings year-on-year in the recent National Rail Passenger Survey for GWR and TPE, while Hull Trains maintained its 90%+ overall satisfaction score.
“In the second half [of the year] we will continue to focus on working with our industry partners to improve the reliability and convenience of our services and keeping passengers informed about the implications of ongoing infrastructure works,” the report said in its conclusions on First Rail.
“We will also continue to examine opportunities to grow our rail business through our disciplined approach to the DfT’s franchising process.”
(Image: 26 First Hull Trains c. Joshua Brown)
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