Transport group’s efficiency drive

Aberdeen-based transport firm FirstGroup has moved up an efficiency drive in its UK bus business to shore up overall earnings after losing rail contracts.

The rail and bus company with operations in the UK and the US, is planning a number of changes to its depot portfolio in pursuit of higher profit margins.

It has recently announced plans to shut depots in Bracknell and Hereford, merge depots in the Potteries and is selling one in south Devon.

The group said in its latest trading update that like-for-like bus takings had grown by 1.4%.

Commercial passenger revenue continued to grow by more than 2%, but was offset by a fall in turnover related to passengers entitled to reduced fares.

The transport group is paid by local authorities, under pressure from squeezed government funding, to subsidise these reductions.

FirstGroup’s UK rail division had delivered like- for- like passenger revenue growth of 6.3% on a “robust” uptick in passenger numbers.

It warned that earnings from this division would be “substantially lower in the first half and for the current year”.

It failed to win new contracts to keep running services on First ScotRail and First Capital Connect, while also missing out on bids for several new deals.

The group hopes earnings from its UK and US bus businesses including Greyhound and First Student will help make up for the shortfall.

Chief executive Tim O’Toole said: “We anticipate strong progress for the current year in our non-rail businesses, mainly from the First Student and UK Bus turnarounds, to largely offset the reduced size of our UK Rail franchise portfolio.”

A First ScotRail train passing Inverkeithing. Dutch operator Abellio took over the franchise in the spring.