Stagecoach chief executive Martin Griffiths described the Scottish transport market as challenging but said the transport group remained committed to investing in its home market.
The firm is locked in negotiations over the future of its Cowdenbeath depot in Fife.
Mr Griffiths said talks were ongoing with the unions about “realigning some of the business” in Fife and said the wider Scottish market was difficult as authorities kept an eye on budgets.
“Scotland is quite difficult at the moment our economy is still challenged,” Mr Griffiths said.
He said tendered services were being squeezed and there was an issue with returns for concessionary travel, such as that offered through the free bus pass scheme for pensioners and disabled people.
“The Scottish Government has been reducing concessionary reimbursements,” he continued.
“To carry more people on concession but for the company to have less is not a sustainable business model. Long-term, what we do with the concessionary scheme will need to be debated.”
The issue was also tackled in the firm’s preliminary results statement.
“The rate of concessionary revenue we receive per passenger journey across the UK has grown by proportionately less than the increase in our cost base.
“We continue to press the relevant authorities to ensure we are properly reimbursed.”