Transport giant Stagecoach today said it faces higher costs from its Megabus budget coach operation as it expands in France.
Following the French government’s decision to liberalise inter-city bus routes of at least 62 miles, the Perth-based group said it was accelerating expansion plans for Megabus with the launch of domestic services in the country.
“Accordingly, we now expect net start-up losses of around £15 million for the year ending 30 April 2016, which is around £5m higher than our previous expectations,” the firm said, adding that it remained “positive” about growth opportunities in mainland Europe.
Stagecoach also said that its Megabus operations in North America continue to be affected by lower fuel prices that mean travellers are opting to drive rather than take public transport. Like-for-like revenues at the division during the five months to 30 September were 5.9 per cent lower than a year ago.
In the UK, like-for-like revenues at the group’s regional bus operations were 1 per cent higher in the 24 weeks to 17 October, with its Virgin Rail Group joint venture – operator of the west coast mainline – up 8.7 per cent.
In a trading statement ahead of its half-year results, due on 9 December, Stagecoach added: “Overall current trading is satisfactory and we remain on course to meet our expectations for the year.”