First Group chief quits as firm swings to a massive loss
FIRSTGROUP CHIEF executive Tim O’Toole has resigned with immediate effect as the bus-totrain firm swung to a mammoth full-year loss.
Executive chairman Wolfhart Hauser will take the hot seat while a new boss is found, with finance chief Matthew Gregory to be appointed interim chief operating officer.
Mr O’Toole admitted that the “time is right” to step aside, as the firm posted a dismal set of figures.
The company, which is behind Great Western Railway, booked a £327m loss in the year to March 31, which compares to a profit of £152.6m in 2017.
FirstGroup was dragged down by a £277m impairment charge linked to America’s Greyhound bus service, which it also operates.
Greyhound has been struggling amid the rising popularity of low-cost airline competition, the firm said.
“Greyhound’s significant short haul and express growth was more than offset by declines in long haul demand as a result of intensifying competition from the ultra low cost airlines, which are bringing significant additional aircraft capacity into operation while also connecting to a growing number of secondary airports.
“The growth in these businesses represents a meaningful shift in US travel patterns.
“Our ability to mitigate these revenue challenges through further cost efficiencies is limited by ongoing increases in fleet maintenance and driver costs, resulting in a significant reduction in Greyhound’s margin.”
In addition, the firm was stung by an onerous contract provision linked to the TransPennine Express rail franchise.
Revenue increased to £6.4bn compared to £5.65bn and First Group’s preferred measure of adjusted operating profit dropped from £339m to £317m.
Mr Hauser said the focus would be on sorting out Greyhound’s issues.
“The board is examining all appropriate means to mobilise the considerable value inherent in the group.
“Initial actions from its evaluation are under way, including conducting a full external review of Greyhound’s business model and prospects, which will conclude in the coming months.”
First Bus remains one of the largest bus operators in the UK, with a fifth of the market outside London.