Losses slashed despite pandemic as Aberdeen transport giant FirstGroup gets finances on track

FirstGroup, the Aberdeen-headquartered transport operator, has slashed its losses as it adjusted to reduced numbers of journeys amid the pandemic.

The First Bus operation forms a major part of Aberdeen-headquartered transport giant FirstGroup. Picture: John Devlin

Bosses at the bus and rail giant described the first-half performance as “resilient” despite a substantial reduction in passenger volumes, reflecting travel restrictions and other pandemic effects.

The group’s UK operations, like those of other transport operators, are being subsidised under government support measures while many of its overseas operations are either fixed contracts or also receiving support.

Revenues in the six months to the end of September were down 12 per cent to £3.1 billion.

Operating losses were reduced to £16.4 million from £118.1m a year earlier, which FirstGroup said was ahead of its expectations, helped by government support, “strong” cost controls and a recovery at its North American operations.

The group said its vast First Bus business in the UK was well-placed to play a key role in delivering “economic, social and environmental agendas including the transition to a zero-carbon economy”, echoing comments a day earlier by Scottish rival Stagecoach.

Chief executive Matthew Gregory said: “Our services are crucial to local communities on both sides of the Atlantic, and we have worked in partnership with our customers and governments to ensure that they are maintained throughout the pandemic.

“As society seeks to recover from the present crisis and build back better, we will play a vital role in providing more environmentally sustainable, value for money transport connections.

“Whilst the outlook remains uncertain due to the pandemic, we performed ahead of our expectations in the first half, have taken prudent action to reinforce the balance sheet and are confident in the resilience of the group.”

He added: “We continue to progress our plans to rationalise the portfolio as the best means to unlock material value for all shareholders.

“With respect to the divestment of our North American contract businesses, we are in discussions with a number of credible potential buyers who have a long term perspective, which the company and our advisers are exploring and evaluating.”

Stuart Lamont, investment manager at Brewin Dolphin Aberdeen, said: “The transport sector remains among the most challenged by the Covid-19 pandemic and FirstGroup continues to feel the effects of that.

“However, there are signs of resilience in the company’s results, with some of its operations coming in ahead of expectations.

“FirstGroup undertook a lot of self-help measures in the early stages of the crisis, namely raising money from lending schemes and implementing significant cost-cutting programmes, which have put it in a reasonable position.”

He added: “FirstGroup had its challenges prior to the pandemic and until passenger volumes can return to pre-crisis levels the outlook will remain challenging, but there is tenacity in the business that has helped it through what many will hope has been the most difficult period and into recovery.”

Meanwhile, FirstGroup has reached an agreement with the UK government over the termination of two rail franchises.

The Department for Transport has accepted that no payment is required in return for scrapping Avanti West Coast’s contract as the brand was “performing well prior to the pandemic”. But a contribution of £33.2m is required by FirstGroup to end South Western Railway’s (SWR) deal.

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