Commuter traffic and subsidy help lift First ScotRail profits

Published on Wednesday 5 November 2008 20:31

FIRST ScotRail is proving resilient to the economic gloom, helped by robust commuter traffic between Edinburgh and Glasgow and a £138 million subsidy.

The extra passengers and the boost from the government's coffers helped revenues jump 8.6 per cent to 259 million in the six months to end-September.

FirstGroup, the transport giant that runs First ScotRail, acknowledged yesterday that the "heavy" government subsidy to the franchise – which is granted to help pay for services to areas like the Highlands – helped it during the downturn

Unveiling the figures yesterday, Sir Moir Lockhead, FirstGroup's chief executive, said: "ScotRail is not recession-proof but there has been no sign that it's declining."

He said the company was delighted that the Scottish Government had earlier this year extended the ScotRail franchise for a further three years to November 2014 – taking in the Commonwealth Games in Glasgow that summer.

Nearly a third of ScotRail's revenues come from commuter traffic, the company said.

The reopening of the Stirling-Alloa-Kincardine line in May had contributed to 4 per cent passenger growth in the latest trading period, and growth is up 20 per cent since the start of the franchise in October 2004, FirstGroup said.

It also said delays on the Scottish network had been cut by 50 per cent since it took over ScotRail.

Headline pre-tax profits in the parent group fell 17m to 54.4m in the six months to end-September. However, that included amortisation charges and one-off acquisition-related costs. Excluding these, underlying pre-tax profits rose to 107m from 74.5m last time. The interim divided is hoisted 10 per cent to 6.05p

Overall rail revenues at FirstGroup, which also takes in First Great Western out of London Paddington and Hull Trains, rose just under 10 per cent. That rate of growth had come off slightly to 8 per cent in October.

Lockhead admitted that First Capital Connect, the commuter business running into London, could be vulnerable to City jobs-bloodletting.

He claimed that when the company ran FirstGroup Eastern into London's Liverpool Street in the last recession, it was affected by hefty job losses in the City but "it was not dramatic" with revenues coming back "within a couple of years".

Underlying UK rail revenues at FirstGroup rose 9.8 per cent, while operating profits were virtually unchanged at 48.3m.

FirstGroup, which is also Britain's largest bus company, with a 23 per cent market share, said profits in the division rose 26 per cent to 60m from 47.6m.

In America, where the company runs yellow school buses plus the Greyhound bus network, profits following last year's Laidlaw acquisition rocketed 384 per cent to $165m (86m) from $34m last time.