TWO of the UK’s leading transport companies have recorded pre-tax profit falls after difficulties with their rail arms.
National Express and Go Ahead have blamed the losses on a lack of government subsidies for their rail franchises.
National Express returned its East Coast Main Line contract to the government in November but could not prevent a full-year £83.5m loss. Go Ahead still run Southeastern rail lines and recorded a pre-tax profits fall of 70 per cent to £12m.
Both warned that 2010 would be another challenging year and urged caution.
John Devaney, National Express group chairman, said: “While 2010 will be another challenging year in a difficult economic environment, we are focused on delivering margin improvement through cost reduction, continuing strong cash generation, and building on the foundations that we have laid in 2009.”
National Express, which completed a £360m rights issue to cut its debt, appointed Dean Finch as chief executive earlier this month and he will look to restore the company’s fledgling rail units.
It is believed Labour plans to banish the Group from the rail market but the Conservatives are likely to let them re-enter after a two year “cooling off’ period.
Analysts said the companies bus businesses remain strong and resilient but the rail units have caused problems as a result of declining passenger volumes during the recession.
Go Ahead chairman Sir Patrick Brown said: “We remain cautious on the outlook for the UK economy and will continue to take management action accordingly. Second half results for our bus division are expected to remain robust, albeit at levels below the record first half of this year.”
The Group reduced net debt to £87m – down from a restated £182.5m a year ago.
It completed the sale of most of its loss-making aviation services division in January, although it still owns the Meteor airport car parking business. It is now reviewing its final aviation ground handling operation at Heathrow Terminal 1.