Stagecoach targets new franchises

TRANSPORT group Stagecoach is hoping to cash in on the government’s rail industry shake-up as it beat forecasts with a 43 per cent rise in first-half profit.

The bus and train operator, led by Brian Souter, said it may bid for new longer franchises as part of a review unveiled by ministers yesterday to help cut costs and boost investment.

The group may target a new 14-year franchise for the West Coast main line and a 15-year franchise for the state-owned East Coast main line, both due to be tendered next year.

Stagecoach runs commuter franchise South West Trains and regional operator East Midlands Trains and owns a 49 per cent stake in Virgin Rail Group, which runs the West Coast.

Stagecoach said it would be interested in taking over the East Coast, although it is likely to face competition from German state railway Deutsche Bahn and UK rival FirstGroup among others.

Finance director Martin Griffiths said: “If the East Coast line is let on the right terms, it would be a very big opportunity and we would certainly be interested in that. We are also committed to keeping the West Coast main line.”

The bus and rail operator beat hopes with a 43 per cent rise in first-half pre-tax profit to £109m -- above a market forecast of about £100m -- on revenues 4.8 per cent higher at £1.13bn in the six months to the end of October, driven by rising UK ticket sales and growth in US buses.

UK rail business rose 6.4 per cent in the period, while Virgin Rail boosted sales by 14.8 per cent. Underlying revenue in its UK bus division rose 2.3 per cent, while its North American coaches operation boosted like-for-like sales by 7.5 per cent.