Stagecoach highlights US growth

BUDGET bus travel in the United States is bucking the wider downturn and will increasingly become a “growth engine” for Stagecoach, the Perth‑based transport group will trumpet this week.

Sir Brian Souter, Stagecoach’s founder and chief executive, revealed last month that North America Megabus.com, launched in April 2006, was extending its service to cover 11 cities in the southern US.

Douglas McNeill, transport analyst at broker Charles Stanley, said an update on future growth plans for Megabus in the States would be the “key point of interest” at Stagecoach group’s interim results on Wednesday.

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“There will be a lot of City focus on Megabus across the Atlantic, in particular, as it has been going great guns. It really has got the potential to be a major revenue stream for Stagecoach in its own right. The US is a very big market,” he said.

“Of particular interest is how much extra capital Stagecoach will need to commit to grow the business even more.”

North America Megabus.com has carried more than 14 million passengers since its launch, which followed the launch of Megabus.com in the UK in 2003 with Scottish trial routes offering fares as low as £1. The UK arm now covers more than 60 locations and carries three million passengers a year.

Another analyst said: “People are very excited about the potential for Megabus in the US. In a few years it’s become pretty significant for Stagecoach.

“The market will increasingly want a sense of how Souter grows it from here. In particular, whether they keep it all in house or partly grow by franchise.”

In the UK, Stagecoach saw revenues at its UK rail arm grow 8.7 per cent in the 24 weeks to 16 October, while its Virgin Rail west coast mainline joint venture achieved a 9.7 per cent rise in sales. Revenues at the UK bus division were up 2 per cent.

Charles Stanley forecasts pre‑tax profits for the group of £190.5 million in the year to April 2012, down from £191.2m during the previous year.

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