Boris Johnson’s Plan B, telling Britain’s workforce to work from home again, has weighed heavily on one of Britain’s leading passenger transport providers.
But David Martin, executive chairman of FirstGroup, said the passenger recovery on trains and buses is being driven by leisure travellers and not commuters and that while the schools, colleges and universities remain open, patronage should remain positive.
FirstGroup is Britain’s largest train operator, wholly or partly responsible for the services on the west coast main line, Great Western, South Western and the TransPennine Express. It also operates buses throughout the country.
Hobbled by a debt mountain and a black hole in its pension funds, the company is seeking a fresh start after the £2.3 billion sale of its US operations. That brought in so much money that it recently returned £500 million to shareholders via a 105p a share offer to investors.
However, with the emergence of new Covid-19 government restrictions, First shares have been falling once more, down by 5p, or 5 per cent, to close at 96 ½ p today.
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Martin believes the fears are overdone. “It is too early to tell what the impact [of Plan B] will be,” Martin said. “But business passengers, commuters have been returning much more slowly. Leisure is where the fastest recovery is.”
First reported that train patronage is back to 65 per cent of pre-pandemic levels and at 71 per cent on the buses.
The company has been surviving on emergency taxpayer subsidies during the pandemic.
In the six months to the end of September it reported a 50 per cent growth in bus profits to £26.8 million on profit margins of 6.8 per cent.
On the trains, First, now contracted on a small-margin management fee to the Department for Transport, made a profit of £17.5 million. That would have been a profit margin of about 2 per cent but for £20 million of start-up and restart losses on its competitor services on the east coast main line, the new cut-price Lumo service between Edinburgh and London, and Hull Trains.
