Stagecoach and its partners in a New York tour bus firm have offered a $19 million settlement to an anti-competition lawsuit in the US.
The move by Twin American and its joint venture (JV) parters – which includes two of Stagecoach’s American subsidiaries – relates to a private action raised on behalf of a “proposed class of customers.”
The settlement – which requires approval from the courts – is on the basis of no admitted liability on behalf of the Twin America JV partners.
While the move would bring an end to one strand of private litigation, a second action raised by the US Department of Justice and the New York Attorney General remains outstanding.
The government action against Twin America – which runs the Big Apple’s popular hop-on, hop-off bus tours of famous sites including the Empire State Building and Times Square – dates back to 2012.
Legal papers filed at that time stated the plaintiff’s intention to “dissolve the joint venture and impose other relief to restore competition and redress the anti-competitive effects of the parties’ conduct.”
In a pre-close trading update yesterday, Stagecoach said it expected to book an exceptional cost of $15m in relation to the private action, but could not fully quantify what the final costs of both lawsuits would be to the firm.
“The defendants have not admitted any liability but have agreed a cash settlement of $19m with the private plaintiffs to fully resolve the private litigation,” Stagecoach said.
“That settlement will be submitted to the court for preliminary approval. Assuming the court grants its preliminary approval, final courtapproval is anticipated in approximately nine to 12 months following a period of class notification and claims administration.
“The government action remains pending at this time. until the government action concludes, the total financial cost of the various actions cannot be determined.
“The allocation and funding of any financial settlements amongst the various defendants is currently being discussed.”
Despite the ongoing legal actions, shares in Stagecoach edged ahead yesterday after the group reported revenue growth in each of its main divisions.
The firm’s regional UK bus operation saw revenues up 4.8% on a like-for-like (LFL) basis in the 48 weeks to March 30, while its London-based operation enjoyed 4.6% growth.
The UK rail arm was up 4.5% LFl while the joint venture Virgin Rail Group operation did even better by posting a 5.9% rise in sales.
Stagecoach’s North America division – a separate entity from Twin America – reported “satisfactory” trading in the period with a 4.1% increase in LFL revenues. The result was aided by a 16.5% increase in revenues from the US Megabus operation – the fastest growing element of Stagecoach Group as a whole – which is about to get a further boost with the launch next month of a new Florida hub.
Overall, the company said the profitability of the group was “satisfactory” and its prospects were “positive” going forward.
Shares in Stagecoach closed the day up 0.72% at 376.6p following trading yesterday.