Lothian Buses post first ever loss as trams take their toll

Published on Tuesday 4 August 2009 22:04

FALLING passenger numbers caused by tram works disruption and the recession pushed Edinburgh's main bus operator into the red for the first time in its 20-year history.

Publication of Lothian Buses' 2008 results comes days after The Scotsman reported they would show a loss because of the tram works.

The firm made an operating loss of 801,000 last year, when soaring costs outstripped income growth to reverse a 5.9 million profit in 2007.

Rocketing diesel prices and a major pension deficit also contributed to the woes.

Lothian Buses, which has been named Britain's best operator several times, had been profitable since becoming a separate company from the city council in 1988.

The firm made a pre-tax profit of 979,000 thanks to interest on investments, but that dived from 10.2m the previous year.

The firm's results will heighten speculation that it could be sold off to help raise cash for cash-strapped Edinburgh Council.

Although Lothian Buses is essentially run as a private company, it is one of the few remaining publicly owned bus operators in the country and is able to run a host of loss-making services through subsidies.

Lothian Buses chairman Pilmar Smith said 2008 had been an "extremely difficult trading time", which had caused a "disappointing" drop in profits.

He said this had led to fare increases, service cuts and the pre-ordering of fuel at agreed prices, which had "significantly improved" the company's performance this year.

Fares increased in January for the second time in a year, a month after a series of cuts to routes.

The number of passengers carried fell by nearly 1 per cent from 114 million to 113 million in the first reduction for a decade.

Delays and diversions caused by work on tram lines in the city centre and Leith Walk hit numbers.

The setback comes as council officials prepare plans to merge Lothian Buses with TIE, the council-owned tram developer, ahead of the start of tram running in 2012. It has raised concerns about the merged firm's ability to absorb expected 2m first-year tram losses.

The results also show that chief executive Neil Renilson, who unexpectedly decided to take early retirement in December, received 311,500 "in compensation for loss of office" in addition to his 324,000 salary package.

Edinburgh South Labour MP Nigel Griffiths said the council must take action to prevent further cuts after failing to properly subsidise services. He said: "The council has taken some bad decisions over the past year. If it doesn't act decisively now, then my fear is that we will see what was among the best bus services in Britain become second-rate."

The city council's transport convener Gordon Mackenzie pledged to continue to support the firm. He said: "Lothian Buses has had a difficult year. The council will continue to invest in initiatives such as park and ride and bus-priority measures to ensure our award-winning bus company can offer passengers a quick, frequent and convenient travel option."