FirstGroup is working to deliver a long-term government contract for its hailed subsidiary Avanti as the group focuses on ensuring “acceptable” service levels to passengers.
“Our complete focus in the second half will be on operational improvements and delivering acceptable passenger service levels,” chief executive Graham Sutherland told analysts this morning.
Avanti made the headlines as it was forced to slash services – including trains between London and Manchester – after a drop in the number of drivers volunteering to work on rest days led to cancellations and delays over the summer.
Since August the train operator, which has moved away from relying on rest day working, has introduced 14 additional daily services – 10 to Manchester and four to Birmingham.
But the target is to increase trains from the current 180 a day to 264 in December.
“We expect material progress as we launch the new timetables in December,” the chief executive added.
Despite its troubles, Avanti last month was awarded a six-month contract extension by the Department for Transport (DfT) “to assess whether it [Avanti] is capable of running this crucial route to a standard passengers deserve and expect.”
Sutherland said FirstGroup has been working on clearing its training backlog, as the group now has more train drivers compared to pre-pandemic levels.
“We’re confident that services will get back to the right level for our passengers,” the chief executive said.
“If we achieve that we’re also confident that we will be able to sign a national rail contract for Avanti.”
A DfT spokesperson told City A.M. current service levels are unacceptable and the company “must do more to deliver certainty of service to its passengers.”
Sutherland’s remarks came on the same day FirstGroup maintained full-year targets unchanged after posting its half-year results.
In the six months ended 24 September, the group posted a 21.6 per cent increase in its adjusted operating profit driven by higher passenger volumes aboard its Lumo and Hull Trains services as well as lower central costs.
FirstGroup’s adjusted attributable profit also rose to £30.8m – up from last year’s £13.3m, while adjusted net cash stood at £7.3m.
Deemed “resilient” amid the current political, industrial and economic headwinds, the financial performance led to FirstGroup declaring an interim dividend of 0.9p per share.
“Now there is potential for additional distribution of the values from exiting North America,” Sutherland said.
FirstGroup sold its Greyhound properties in September for £122m, with the sale set to be completed in December.