Transport giant Stagecoach today said its overall profitability remained “satisfactory” during the first quarter of its financial year, helped by a jump in sales at its Megabus budget coach operation in North America.
The Perth-based group said Megabus was its fastest-growing division, with revenues soaring 21.8 per cent during the three months to the end of July, boosted by the expansion of services into California and Texas.
Like-for-like revenues at its regional bus operations in the UK grew 4.5 per cent in the 12 weeks to 21 July, with UK rail revenues up 6.5 per cent.
At the firm’s Virgin Rail joint venture, which operates the west coast mainline, revenues rose 5.8 per cent. Last year’s fiasco over the handling of the franchise initially saw the route awarded to rival FirstGroup, but it was handed back to Virgin after “major failures” in the tendering process.
To keep trains running, UK ministers stuck a deal for Virgin to carry on running services while earning a fee equivalent to 1 per cent of revenues, with the Department for Transport (DfT) bearing the risk in case revenues fell short of expectations.
Stagecoach said today that Virgin and the DfT are discussing revised terms that could see more of the risks shifted towards its joint venture “for a commensurate financial return”.
Finance director Ross Paterson said: “Overall, current trading is good and the prospects for the group remain positive.”
Shares in the group rose more than 3 per cent following this morning’s trading update.