Break-up looms after travel chief is ousted

BUS and train operator First Group has dumped its boss Tim O’Toole after crashing into the red.

On another bruising day for investors, the 62-year-old stepped down as Great Western Railway owner First reported annual losses of £326m having made a profit of £152m the previous year.

It also signalled a break-up is on the cards – with its Greyhound bus service in North America now up for sale.

Shares fell 19pc, taking losses since O’Toole became boss in 2010 to 73pc.

The American, who has earned more than £8.5m during his time leading the firm, said: ‘The time is right for me to step aside. Today’s results clear the way for the new approach sought for our chairman and the board.’

Executive chairman Wolfhart Hauser said: ‘This year’s results fell short of our ambitions. We are disappointed that we did not make the further progress we intended.’

First booked a £106m loss on its TransPennine Express railway franchise and a £227m write-off on the value of its Greyhound bus service. A full review of Greyhound’s business model and prospects is under way, with a sale one option.

The FTSE 250 firm has only just rejected an all-cash bid from US private equity firm Apollo following a slump in its share price due to a profit warning.

The board said the approach undervalued the firm, but analysts were sceptical. AJ Bell investment director Russ Mould said: ‘If First was looking for validation for its decision to rebuff a bid from US private equity firm Apollo then today’s results do nothing to provide it.’ Analysts at Investec said: ‘No new initiatives have been presented to improve performance.’

The firm’s struggling Greyhound US bus division was hammered by cheap travel in the US, as well as rising driver costs and tighter US immigration enforcement. Sales fell 0.7pc but it slumped to a loss of £266m.

Sales rose 55pc to £1.9bn in its First Rail division after it took over South Western Railway last August. But it booked losses of up £106.3m on the TransPennine Express contract due to lower-than-expected sales, making a loss of £50.6m for the year.

O’Toole’s pay-off for leaving has not been revealed. His contract includes a 12- month notice period, suggesting he is in line for some of his annual salary despite stepping down immediately.