IT would have seemed like a safe bet yesterday morning to suggest that FirstGroup fully intended to “successfully mobilise” and take over the West Coast mainline on 9 December. The firm said as much in its trading update.
The transport group certainly gave no indication that the franchise win would later be cancelled in dramatic fashion, in a hail of government investigations, staff suspensions, and the brakes put on all other rail route competitions while the Department for Transport looks into how this has gone so catastrophically wrong.
In any event, FirstGroup’s confidence at 7am that it would all work out seemed like not much more than bravura in the face of an inherently uncertain situation, expressing its faith in the bid process and in the government’s lawyers instead of providing any material reason to think that Virgin’s complaint will not affect the handover.
But then how could the firm be anything but bullish, with just nine weeks to go before the contract starts?
There were at least other reasons in this statement for faith in FirstGroup. Like-for-like passenger revenue is expected to increase by 8.1 per cent in its UK Rail division in the half-year period. And as the DfT revealed last night, it will be compensated for time and money spent on bidding for the West Coast.
In buses, the picture is much more mixed, with its UK Bus division eyeing just 2.5 per cent like-for-like passenger revenue growth. In North America, where FirstGroup makes 45 per cent of its revenues, Greyhound is looking at just 1.7 per cent expansion. FirstGroup has a plan to reinvigorate its bus performance, but after two bus-related warnings from chief executive Tim O’Toole since his appointment in 2010, there must be an element of faith, as with the franchise dispute, in everything getting back on track – eventually.
CRISIS STATIONS ONCE AGAIN
New York’s suit against JP Morgan over Bear Stearns mortgage-backed securities is an alarming shot across the bows of the whole sector. Just when you thought it was safe to go back in the water, four-yearold accusations aimed at a firm you were encouraged by the federal government to buy get fired at you again like ironic torpedoes. Perhaps JP Morgan should now bring a countersuit against Ben Bernanke for helping it to take on the foundering investment bank, liabilities and all.
While the Federal Reserve chairman won’t be worrying too much about that prospect, other financial services firms should be nervous, with this case being touted as just the first of many from Eric Schneiderman and a federal-state working group. Time to check the lifebelts.