Economy

Stagecoach profits surge 80% on back of taxpayer support for bus services

Stagecoach profits soar 80% thanks to taxpayer support for bus services and post-lockdown public transport revival

  • Stagecoach reported a profit of £19.3m for the six months ended October 29
  • Payments from the Bus Recovery Grant have boosted the company’s regional bus division
  • The company’s performance took place against the backdrop of a labor shortage

Stagecoach’s interim profits are up 80 per cent after the easing of pandemic restrictions led to an ongoing recovery in UK bus transport.

Britain’s largest bus operator reported a profit of £19.3m for the six months ended October 29, up from £10.7m last year when fewer people traveled on public transport.

The regional bus business was the only division to record an operating profit, supported by £45.9 million in payments from the UK Government’s Bus Recovery Grant to protect local services.

Profitability: Stagecoach, the UK’s largest bus operator, reported a profit of £19.3m for the six months ended October 29, up from £10.7m last year

The segment also saw the strongest revenue growth, rising 15.9 per cent to £508.1 million thanks to a rapid recovery in fare-paying passengers and work during the Commonwealth Games in Birmingham.

Concession sales have not recovered as quickly, but were still higher than last year, due to the huge popularity of a free bus travel scheme for under-22s introduced in Scotland in January.

Stagecoach achieved this result despite sizable labor shortages in the transport sector, which put pressure on wages and caused the disruption of services.

However, the London bus branch was more adversely impacted by staff shortages, which turned into an operating loss of £1.6m after a reduction in service levels led to lost revenue and significant fines.

Under Stagecoach’s contract with Transport for London, it is required to run certain services and not unilaterally scale them back.

This division continued to achieve healthy sales growth, although this was largely related to the expansion of the business following the acquisition of Kelsian Group and HCT Group.

The Scottish company forecasts further increases in profitability and like-for-like sales during the second half of the fiscal year as it benefits from slowed inflation increases in contract revenues and an improvement in labor market issues.

Martin Griffiths, the CEO, said: “We have made further progress in rebuilding from the pandemic, managing near-term macro headwinds and positioning our business to maximize growth opportunities as we transition to a net zero future.”

He added that the current challenging economic conditions would prompt greater numbers of people to take fewer car trips and use public transport more often.

Stagecoach noted that passenger travel on regional buses is already back at about 80 percent of pre-pandemic volumes, with recent commercial revenues only 8 percent below 2019 levels.

Many of the financial problems faced by British households stem from the skyrocketing oil and gas prices over the past year following the gradual easing of travel restrictions and Russia’s full-scale invasion of Ukraine.

According to the motor organization RAC, an average liter of unleaded petrol now costs 158.9 pence, while people with a diesel car now have to pay an average of 182.7 pence.

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Jacky

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