Stagecoach eyes a European expansion in wake of deregulation move

SCOTTISH transport company Stagecoach has highlighted its ambitions in the long-distance coach market in mainland Europe as it pursues opportunities arising from deregulation.

The Perth-based bus and rail company, which launched megabus.com services in the fast-growing domestic German market at the start of this month, yesterday declared it was progressing plans to launch services within Italy. It is also working on plans for a Cologne-Lyon-Barcelona service.

A Stagecoach spokesman said: “Mainland Europe is a significant focus for us.”

He noted Italy, Germany and France had a combined population of about 212 million, and described megabus.com as a “single, powerful brand” in Europe. Stagecoach said that as it continued to expand this “promising business”, it anticipated operating losses from mega- bus.com in Europe to increase from about £5 million in the 12 months to April 30, 2015, to £10m in the following financial year.

Stagecoach already runs megabus.com services that connect the UK, France, Spain, Germany, Belgium, Luxembourg, and the Netherlands.

The company declared it was not planning any significant expansion of its megabus.com operations in North America, a market in which a significant drop in fuel prices has resulted in a marked slowing of revenue growth as people make more journeys by car.

It told the stock market it was pleased that a settlement had now been agreed in principle with the US Department of Justice and the New York Attorney General’s office in respect of the previously reported anti-trust litigation relating to the group’s joint venture, Twin America. Stagecoach said it anticipated its share of the additional costs associated with this settlement would not exceed £3m.

Revenues in Stagecoach’s UK rail division, which takes in South West Trains and East Midlands Trains, were up nine per cent on a year earlier on a like-for-like basis during the 48 weeks to March 29.

Stagecoach said it was pleased so far with progress with its new Virgin Trains East Coast rail franchise, in which it has a 90 per cent stake. It put year-on-year, like-forlike revenue growth in its UK bus operations, outside London, at 2.4 per cent in the 48 weeks to March 29. Revenue growth on this basis in its Virgin Rail Group joint venture, which runs West Coast Main Line services, was 7.6 per cent.

Stagecoach said that revenues in its North American operations in the 11 months to March 31 were up one per cent on the same period a year earlier. The City forecasts Stagecoach will make underlying pre-tax profits of £183m in the year to April 30, 2015, up from £180.7m in the prior 12 months.