The Scotsman

Go-ahead’s profits come off the rails

● Southern Rail strike action dents earnings as group looks overseas

- By HOLLY WILLIAMS AND MARTIN FLANAGAN mflanagan@scotsman.com

The group behind strike-hit Southern Railway yesterday claimed that it was boosting performanc­e for passengers, but gave warning of a continuing hit to rail earnings after a slide in annual profits.

David Brown, chief executive of Go-ahead, said Southern Rail had cut cancellati­ons by 75 per cent and boosted train capacity 36 per cent on some of its services despite the industrial action.

He admitted he could offer passengers no “guarantees” of an end to the strikes, but was “resolute on trying to improve performanc­e on Southern and put all this behind us”.

Go-ahead – which runs Southern through its Govia Thameslink Railway (GTR) joint venture with French firm Keolis – posted a 5.7 per cent fall in pre-tax profits to £136.8 million for the year to I July.

That compared with a profit of £145m in the previous year. Rail earnings tumbled by 16 per cent to £59.9m, with the ongoing industrial action contributi­ng to a near-4 per cent fall in passenger journeys and a 4.1 per cent slide in revenues atgtr. the company revealed that a priority now was to target more overseas work, with the aim of making 15 to 20 per cent of its profits abroad within five years.

Brown said: “Progress in our internatio­nal strategy will see some of the lost revenue (from losing the London Midland rail contract) replaced with contracts in the targeted markets of Singapore bus, Dublin bus and German rail.”

Shares in the group closed down 11.6 per cent at 1,550p as it warned rail profits would remain under pressure in the new financial year.

Brown added: “We apologise to our Southern passengers who have been inconvenie­nced for many months by disruption caused by industrial relations issues.

“Service levels are beginning to improve but there is still a lot of work to be done to provide the level of service we and our customers expect.”

Southern was ordered to pay for a £13.4m package of improvemen­ts by the UK government in July, which will see it fund 50 non-board supervisor­s and other projects to boost service levels.

The firm has been in deadlock with unions over proposals for driver-only operated trains, but GTR has also admitted it underestim­ated the impact of extensive railway improvemen­t works.

The Southern dispute started more than 16 months ago, and the Rail, Maritime and Transport (RMT) union has taken 34 days of strike action, while there have also been six days of walkouts by the drivers’ union, Aslef.

Brown said the company’s switch to driver-controlled trains meant the most recent RMT strikes had a “minimal” impact on service.

Go-ahead’s bus earnings were down 0.5 per cent at £90.7m, dragged lower by the regional bus business. The London bus operations failed to retain some contracts, while Brown said the division’s financial performanc­e was also impacted by declining passenger volumes in the north east of England.

“This performanc­e was delivered against a backdrop of wider bus industry challenges, with national regional passenger volumes down 2.6 per cent and pressure on London bus volumes as congestion continues to increase,” the chief executive said.

“We apologise to our Southern passengers who have been inconvenie­nced for many months by disruption.”

DAVID BROWN, CEO

 ?? PICTURE: JACK TAYLOR ?? 0 Go-ahead Group says no guarantees on an end to Southern Rail disruption
PICTURE: JACK TAYLOR 0 Go-ahead Group says no guarantees on an end to Southern Rail disruption

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