COVID Travel Drop Puts Strain On FirstGroup
Public transport firm FirstGroup, which operates train and bus franchises, has warned its future is looking uncertain as the coronavirus crisis has heavily impacted passenger numbers.
Its shares have taken a dive on the news as the collapse in passenger numbers has caused a heavy dent in the firm’s revenues. The company runs numerous bus franchises, Avanti West Coast trains and Southwestern Railway in the UK. It also operates Greyhound buses in the US.
It full-year results for the 12 months to the end of March show a pre-tax loss of nearly £300 million. A loss three times the size it posted for the previous 12-month period.
Among the losses include £21.5 million in lost revenue from the effect of the coronavirus lockdown, which saw public transport numbers in the UK drop by as much as 90 per cent. This piled on top of already razor-thin margins in its rail franchises in the UK.
FirstGroup says it still has the resources to keep going, but the ongoing uncertainty of passenger numbers places what it describes as ‘material’ uncertainty on the future of the Aberdeen-based firm.
Virus Impact On Asset Sales
To help shore up the company and offset some of its losses, FirstGroup has made use of £300 million from the Bank of England’s Covid Corporate Financing Facility. Meanwhile, it has also put up its North American assets for sale. These include the famous Greyhound bus operation, plus school bus services in the US and Canada.
Talks had been advancing well for the sale, but COVID-19 put a spanner in the works, and FirstGroup has admitted that its progress has been slowed down by the pandemic.
The statement by FirstGroup has caused shares to trade almost 20 per cent down, meaning that the company has lost more than two-thirds of its value since the start of the year.
But while there’s uncertainty facing the future of FirstGroup, what’s in little doubt is the impact the coronavirus crisis has had on the transport sector – an industry that already often runs on tight margins. In short, FirstGroup is unlikely to be the only transport firm that finds itself in tricky driving conditions right now.