- By Region
Strong growth in international markets helped to offset weaker demand for bus services in the UK at National Express and Stagecoach, the rail and bus operators.
In trading updates on Tuesday, the companies also reported higher year-to-date growth from their UK rail services, which account for roughly half of their total revenues.
“It will get tougher for the bus operators with the rise of unemployment [in the UK],” Karl Burns, analyst at Shore Capital said, adding that the operating model of both companies allowed them to cut back on bus services more easily during tough economic times.
National Express said customers seeking “better value transport services in a weak domestic economy” drove revenues up 7 per cent at Alsa Bus and Coach services, its Spanish bus operator, in the nine months to the end of September.
The company added that revenues in its North American school bus business rose 10 per cent in the period. National Express expanded in the US in September, paying $200m cash for Petermann Partners, an Ohio-based bus operator.
But the robust performance in Spain and the US compared with more modest revenue growth of 2 per cent in the UK bus operations.
Stagecoach said it had seen 12 per cent revenue growth in North America in the five months to the end of September. The company’s fastest growing regional business is Megabus, a service based on the budget airline model.
While Stagecoach does not provide separate numbers for Megabus, Mr Burns said the business had profit margins of about 20 per cent in a market where it competes directly with domestic airlines offering shorthaul flights.
Steven Stewart, Stagecoach’s director of communications added, “There’s definitely signs that we’ve been attracting people that previously took their car or the airlines.”
Stagecoach reported growth of 2.2 per cent in the UK, where it operates bus services in cities such as London, Liverpool and Newcastle.
Full-year results for both companies should be buoyed by continued growth in UK rail businesses.
Stagecoach, which operates the South West and East Midlands rail franchises, reported an 8.7 per cent increase in its rail business revenues, and 9.7 per cent growth in revenues for Virgin Rail Group, in which it has a 49 per cent stake.
National Express, which operates the c2c and National Express East Anglia franchises, reported 6 per cent revenue growth in its UK rail business.
National Express said on Tuesday it did not expect proposals by local transport authorities to introduce tickets valid across rival operator services to cause any “significant changes” to its operations.
Shares in National Express shares closed down 1.9 per cent at 225.8p, while those in Stagecoach closed down alomst 4 per cent at 238.3p.