Stagecoach has issued a coronavirus profit warning today as both it and Go-Ahead scrapped their dividends as travel restrictions bite.
The operator warned it will now miss its target for adjusted earnings per share for the 12 months to the start of May.
“The quickly developing Covid-19 situation means we no longer expect to achieve our previous expectation,” Stagecoach confirmed, adding that it could not issue new profit guidance.
“Whilst we continue to monitor the situation closely, it is too early to predict reliably the effect on profit.”
Stagecoach also said it was “unlikely” it would pay any more dividends for the current financial year.
The transport company witnessed a 50 per cent drop in pensioner bus fares due to the coronavirus outbreak,. And it warned coronavirus has “adversely affected” London bus use.
Transport for London (TfL) last week warned of a 40 per cent drop in London bus services after Downing Street asked people to avoid public transport.
Meanwhile, travel ticket purchases – worth around 63 per cent of regional bus revenue, is down around 40 per cent.
Seeking to reassure investors, Stagecoach said cut costs and secured £325m of new bank facilities, as well as counting £290m in available cash and loans.
Directors will also take a 50 per cent pay cut “for a period of time and will not receive a bonus for 2019./20 nor a pay rise for 2020/21.
Stagecoach is also in discussions with the government over protecting jobs.
Investors sent Stagecoach’s share price down 5.9 per cent to 57.8p in early trading.
Go-Ahead benefits from rail franchise suspension
Rival transport operator Go-Ahead today also scrapped its dividend over coronavirus.
It had planned to pay 30.17p per share, but today it suspended that until “there is greater clarity on the impact of Covid-19”.
However, its shares jumped 11 per cent to 720.5p in contrast to Stagecoach as the government suspended all rail franchises.
The company holds two rail franchises: Southeastern, which accounts for around 30 per cent of revenue, and Govia Thameslink Railway, representing 45 per cent of revenue.
Both are running weekend schedules as the UK coronavirus crisis has left the vast majority of workers staying at home.
The Department for Transport (DfT) moved to temporarily suspend all rail franchise agreements to help the UK’s train network survive a 70 per cent drop in passenger numbers.
“Allowing operators to enter insolvency would cause significantly more description to passengers and higher costs to the taxpayer,” the Department for Transport said.
Go-Ahead chief executive David Brown said: “Once this crisis is over, strong bus and rail connections will be needed to rebuild our economy and support our communities; providing links to education, employment, retail and leisure facilities, and between friends and families. In our regional bus businesses, this means we need support from national government in the short term to maintain these vital lifelines for the long term.
“In the meantime, we aim to support the UK’s efforts in tackling the crisis by providing unutilised buses to transport NHS workers, supporting supermarkets with food deliveries and delivering essential goods to cut off and self-isolating communities.”