Bus giant Stagecoach sees passenger pick-up but warns of virus fallout

Scottish bus group Stagecoach said demand for its services was “steadily recovering” but warned the new restrictions recently announced as virus rates rise may discourage passengers from using public transport.

One of the new buses operated by Perth-based Stagecoach featuring its latest branding.
One of the new buses operated by Perth-based Stagecoach featuring its latest branding.

In a trading update, the Perth-based group – the UK’s biggest bus and coach firm - said it had seen commercial revenues from its regional operations return to around 50-60 per cent of the levels seen last year. Vehicle mileage is running at more than 93 per cent of the previous year’s levels.

The group also said it was grateful for the financial support put in place by governments in England, Scotland and Wales and by local authorities to protect the continuity of local bus services.

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Stagecoach said while the government backing was in place, it expects to avoid significant operating losses.

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The group highlighted strong operational and financial performance of its London bus business in particular and said it expects profitability in 2020/21 to be “broadly consistent” with the previous year.

The group also said it was continuing to make positive progress in unwinding the affairs of its former train operating companies. It stressed it has a “solid financial position” with available liquidity of over £800m.

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Stagecoach said its outlook for the financial year ending 1 May 2021 is unchanged from when it announced full year results in July but cautioned that the ongoing Covid-19 situation and uncertainty around the UK's recovery made it difficult to reliably predict financial performance.

Chief executive Martin Griffiths, said: “The safety and well-being of customers and our people remains our absolute priority as we continue to navigate the uncertainty from Covid-19.

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“While the situation remains fluid, we have made progress in the restoration of our networks to close to pre-COVID levels and in growing passenger volumes safely within the current restricted environment.

"We have a strong business, with good liquidity, devolved operating companies closely focused on our customers and local communities, good financial discipline and a supportive relationship with government and our local authority partners."

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Adam Vettese, an analyst at investment platform eToro, said although the group had taken a substantial hit from coronavirus “there are signs of real progress as it continues its recovery”.

“Passenger numbers are down a lot still, but demand is improving and now the coach company is operating 93 per cent of the vehicle mileage of last year, meaning it is nearly operating at full tilt,” he said.

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“Of course, as with most firms, a second lockdown or a further dip in passenger numbers would slam the brakes on its recovery. While that would be less than ideal, Stagecoach has plenty of headroom in its existing credit facilities and cash reserves to weather the short-term ‘circuit breaker’ lockdown being mooted in the press.”

The update came as the company celebrated 40 years of operating since Sir Brian Souter and his sister Dame Ann Gloag, founded the groupin Scotland. To mark the anniversary the group is asking communities where it operates services to nominate unsung heroes of the pandemic.

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