Brian Souter urges government to spare bus fare concessions

Published on Wednesday 23 June 2010 19:29

STAGECOACH boss Brian Souter yesterday called on the government to wield any widespread deficit-cutting axe on road-building and rail infrastructure costs to protect areas such as concessionary bus fares.

• Stagecoach's Brian Souter says its Megabus operation is growing fast in the US. Picture: Complimentary

His plea came as the Perth-based bus and rail group saw a slide in annual profits to 129.8 million from 170.8m in the year to end April as the company was hit by 22m in extra fuel costs and the bad winter weather.

Souter, unveiling flat bus profits of 126m and bus industry-leading profit margins of 14.4 per cent, said the secret of the division's resilience was fares 15 per cent below those of its competitors.

He said he remained confident about Stagecoach's overall prospects but there remained "threats from the government sector".

On the bus industry, he said: "What will happen to concessionary fares? It was not indicated in the Budget.

"I would cut road-building before I cut concessionary fares. There are big social implications (for the latter]."

Warning that any "unintended consequences" of government action needed to be considered, Souter, who founded Stagecoach 30 years ago, said rail infrastructure in Britain, which is run by Network Rail, was also a potential area of "big savings".

"There are big numbers in railways," he observed. "There are big numbers in its infrastructure. Our infrastructure cost per mile is far higher than other countries. We have to seriously question why there is such a big differential."

Stagecoach, which runs South Western Trains out of London Waterloo, East Midlands Trains and has 49 per cent of west coast operator Virgin Rail, took 400 people out of the company in a cost-cutting drive during the economic downturn. This saved it 90m of annualised costs.

Rail profits at the group in the latest year reversed 25.3 per cent to 41.6m (from 55.7m) in the tougher climate. Overall rail revenues rose 5 per cent and Souter said passenger volumes were up – by 20 per cent on Virgin Rail.

Stagecoach's share of VR's profits fell 40.3 per cent to 25.5m. The company's profits in North America fell by more than a third to $27.4m due to the economic downturn. However, it said there were patchy signs of improving revenue trends.

Megabus, Stagecoach's cheap fare coach operation, was now seeing "exponential" growth in north-east America, particularly around Chicago and Philadelphia, Souter said.

He added that Stagecoach had a "lean" balance sheet to allow it to take part in any major European transport sector consolidation, "although we are not about to do something".

&#149 Brian Souter was last night named Ernst & Young Scotland Overall Entrepreneur Of The Year 2010 at an awards dinner at Gleneagles.

The judges described Souter as "a true global entrepreneur who demonstrates great leadership along with a keen eye for long-term vision and business growth".