Stagecoach confident despite bumpy Covid ride
Bus giant Stagecoach said the financial support being provided by the Scottish and UK governments gives it confidence that the industry has a strong future when the economy re-opens.
In a trading update, the Perth-headquartered group said that given the current restrictions it was difficult to predict when profitability will recover.
However, with the benefit of positive cash flow in recent months and access to UK government loan schemes the group stressed it was in a “solid financial position” with over of £850 million of funds at its disposal.
It recently won £9m from a Scottish Government scheme to put ultra-low emission buses on the roads and will invest around £12m itself to buy 46 vehicles and install the infrastructure needed to run them.
Stagecoach said the investment "underlines our confidence in the positive long-term outlook for buses in the UK".
UK ministers also recently announced a national bus strategy for England which will see the government increasing funding for buses.
Government finance has also been key to Stagecoach and other public transport companies during a time when travel dried up because of national lockdowns.
The company's regional buses are currently carrying 46 per cent of their pre-pandemic passenger numbers, with the company's vehicles covering 86 per cent of the miles they did in 2019. However, in London, full service has now been restored.
Gerald Khoo, an analyst at Liberum, said: “Targeted Government support schemes remain in place for the foreseeable future. We would not expect this support to end until social distancing requirements have been dropped.”
Stagecoach chief executive Martin Griffiths the board was keepingitsoutlookunchanged for the current financial year.
"We remain confident that there is a strong and positive future for public transport as we emerge from the Covid-19 pandemic,” he said.
"Government commitments in the recently-published national bus strategy provide a huge opportunity to fundamentally transform mobility in our communities, moving away from towns and cities built around cars to more vibrant and prosperous places well-connected by easy-to-use sustainable public transport and active travel."
Stagecoach borrowed £300m last year under the UK government’s Covid Corporate Financing Facility with the money repaid during February and March. It has since re-borrowed the same amount which is due to be repaid early next year.
In the update the company said it was continuing to make positive progress in unwinding the affairs of its former train operating companies.
Its Sheffield Supertram business is also receiving government payments in the form of Light Rail Revenue Restart Grant income for continuing the essential tram services it provides. The payments are committed through until 21 June and industry bodies are in discussions with the UK Department for Transport around arrangements beyond that date.
Earlier this week, Stagecoach criticised Manchester mayor Andy Burnham's decision to proceed with a bus franchising plan for the city. It said it was "disappointed”.