London buses and UK rail help offset difficulties for Go-Ahead

Go-Ahead Group updated the market on its trading for the year-to-date on Thursday, reporting “high levels” of punctuality and customer satisfaction across its bus and rail businesses, with record punctuality for its Southeastern and Govia Thameslink Railway businesses.

The FTSE 250 passenger transport operator said revenue growth for the period from 30 June to 26 October in its regional bus division was around 2.5%, while passenger journeys there rose by 0.5%.

For its London and international bus operations, revenue was up 8%, mileage was 4% higher, and its peak vehicle requirement was ahead 4.5% year-on-year.

Overall regional bus performance was slightly weaker than expected, the board said, but it added that London and international bus operations were still performing well, in line with expectations.

In rail, Go-Ahead reported “strong” on-time performance of 69.3% at Southeastern, ahead of the end of that franchise on 31 March 2020, with the company saying it was in talks with the Department for Transport over the possibility of a direct award contract from 1 April.

At Govia Thameslink Railway, which operates the Thameslink, Southern, Great Northern and Gatwick Express brands, Go-Ahead said the operation was now contributing to its profitability.

It said on-time performance was 71.1% there, making it the fourth best-performing UK train operator.

For international rail, Go-Ahead said two of its five secured rail contracts in Germany began in June, with additional services to be added to those in December, alongside the launch of the third contract.

“Having encountered operational issues in the early stages of the first two contracts, work is underway to stabilise performance and improve service availability,” the board said.

“We will also begin operating rail routes in Norway during December, where the final stages of mobilisation are well underway.”

Overall expectations for the rail division remained unchanged, with a good performance in the UK offsetting a challenging operational start to the two new German rail contracts, the board added.

It said mobilisation was reaching completion ahead of new bus and rail contract introductions in Ireland, Norway and Germany in December, with a “strong” pipeline and bidding programme underway in the firm’s target international markets.

“In regional bus, we continue to see growth in passenger journeys and our yield enhancement plans are beginning to deliver improvements,” said chief executive David Brown.

“The integration of our new bus company in Manchester, combined with cost pressures in some areas of the business, has slightly lowered our expectations for this division's financial performance for the full year.

“In our London and international bus division, all of our businesses are performing well and in line with expectations.”

Brown said he “firmly believes” in the fundamental strength of the bus business.

“Buses have a significant role to play in transforming the way people travel and in slowing the rate of climate change, improving air quality and easing congestion in our towns and cities.

“We continue to invest in the customer experience and were pleased to introduce the UK's first tap on, tap off capped payment scheme outside London, on our buses in Brighton.

“Since launching in September, the number of journeys paid for using this method has grown to 25% of all on-bus transactions.”

For rail, Brown said he was “pleased” to see the continuation of strong performance across its UK operations, delivering “some of the highest” levels of punctuality and customer satisfaction ever seen on those networks.

“In October, Govia Thameslink Railway completed the introduction of its new fleet of 717 trains delivering greater capacity and reliability to our passengers with 1,500 new carriages brought into service since 2014.

“Internationally, mobilisation is well underway for new contracts that will begin in Norway, Germany and Dublin next month and we continue to consider bidding opportunities across our target markets.”

Go-Ahead Group said it would reports its half-year results for the six months ending 28 December on 12 March.

At 0921 GMT, shares in Go-Ahead Group were down 3.42% at 2,200p.