Lothian Buses left running on empty

LOTHIAN Buses is running at a loss for the first time in its history as the impact of the tram works and soaring fuel costs saw the company take a £9 million hit.

New figures show the council-owned firm made a 801,000 operating loss in 2008 – a sharp fall on the 5.9m profit it made in 2007, and the first time in its 20-year history it has been plunged into the red.

The firm still made a pre-tax profit of 979,000 after securing other sources of income, but the figure was down 90 per cent, from 10.2m a year earlier.

The company said the results were proof that last year had been "extremely difficult", but said it had improved its performance in recent months by cutting loss-making routes and increasing the cost of fares.

The bus company, which began in its current form in 1988, has suffered falling passenger numbers as a result of the tram works, which have slowed traffic and diverted routes.

There are also fears the company could be forced to bail out the Capital's tram project to the tune of 5m a year once Lothian Buses and tram firm TIE are merged as Transport Edinburgh Limited.

The company was also today forced to defend paying its former chief executive, Neil Renilson, 324,000, after he took early retirement last year.

Nigel Griffiths, MP for Edinburgh South, said the council had to act now 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."

In December, Lothian Buses blamed the economic slowdown after passenger numbers plunged to 111m from a high of 114m the previous year. It was the first fall in passenger numbers after nine years of successive growth.

Pilmar Smith, Lothian Buses' chairman, said: "Last year proved to be an extremely difficult trading time. Escalating fuel prices, coupled with falling passenger numbers and a significant pension deficit led to a disappointing drop in profits for 2008.

"Going forward, steps have been taken, significantly improving the company's performance with fare increases, service cuts and fuel hedging to name a few."

On the money paid to Mr Renilson, he added:

"During Neil's ten-year tenure at the helm of Lothian Buses he orchestrated constant passenger and revenue growth."

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