Rail franchises operators & contracts

07.12.16

Stagecoach reports half-year profit dip due to ‘subdued’ ECML passenger travel

Stagecoach has reported that it continues to expect a slight dip in its earnings this financial year, saying that improving demand for rail travel might help counter-balance its falling bus revenues.

The transport company’s revenue for May to October edged up from £1.97bn to £2bn, while pre-tax profits nudged down slightly from £91m to £89.5m.

Stagecoach put the decline down to “subdued” revenue trends and specific concerns over passenger numbers travelling on its East Coast franchise, although its South West Trains franchise offering London commuter rail services has been extended until at least August 2017.

Chief executive of Stagecoach Martin Griffiths highlighted the company’s growth strategy of focusing on customer satisfaction, saying: “There is a large market opportunity for modal shift from cars to public transport against a backdrop of population growth, urbanisation, technological advancements and an increase in pressure to tackle road congestion and improve air quality.”

Stagecoach welcomed transport secretary Chris Grayling’s announcement on planned changes to train contracts after its revenues were in part affected by Network Rail maintenance works.

Griffiths said that the proposals for TOCs to begin sharing responsibility with Network Rail for maintaining tracks would make the company’s management more accountable for rail delays and better equipped to resolve issues.

“If we can actually see this now happen and build on it positively and make the words become real action then I endorse it absolutely,” he commented.

Stagecoach’s forecast expects revenue growth in the second half of the year, predicting that a recovery in rail passenger numbers, helped by changes to pricing and higher marketing on its East Coast routes to Scotland, will eventually make up for lower demand for bus journeys.

Economic weakness has reduced bus travel in the north of the country while the lower price of fuel has encouraged more people to drive, its report explained, but it expects the East Coast line to be profitable throughout its contract, due to expire in 2023.

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Comments

Richard   08/12/2016 at 16:43

Fortunes on East Coast may improve if Stagecoach ditched the Virgin brand, which to many suggests extortionate pricing and lots of talk with little reality! I have never understood the smoke and mirrors surrounding the quality of the Virgin brand name, nor why Stagecoach with 90% of the Franchise bother to brand it this way?

Andrew Gwilt   08/12/2016 at 20:46

Stagecoach are still going to lose the South Western Franchise despite ordering 30 5-car Class 707's next year.

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