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Increased revenues now arriving for FirstGroup

Increased revenues now arriving for FirstGroup

SCOTRAIL OPERATOR FirstGroup saw train service revenues rise by more than 8% during the lead-up to Christmas, the firm has revealed.

First, which runs a string of services on lines the length and breadth of the UK, said income in its rail division had benefited from “strong passenger growth” in all areas of Britain.

However, executives also expect profits to dip by £10 million thanks to disruption in its American school bus business, caused by Hurricane Sandy.

The Aberdeen-headquartered group, which will collect a total of approaching £3 billion in public subsidies over the course of its recently-extended 11-year deal with government agency Transport Scotland, said it backed a call for an early return to new UK franchising agreements following the suspension of the system in the wake of last summer’s West Coast mainline fiasco.

FirstGroup had been given the contract to run one of Britain’s most important transport routes only for the deal to be quashed when the Department for Transport admitted it had made “completely unacceptable mistakes” during the award process and following a legal challenge from existing operator Virgin Rail.

Yesterday, First said it agreed with a recommendation to restart the franchising system made in an independent report into the debacle by Eurostar chairman Richard Brown.

The company said an early return would ensure “the private sector can continue to provide effective and efficient passenger rail services with further performance and infrastructure improvements.”

“As the UK’s largest and most experienced rail operator, we remain committed to maintaining a leading position in the market,” the company said in a trading statement to the markets.

“We look forward to receiving details on the recommencement of the franchise process and submitting further high quality bids deliver for passengers, taxpayers and shareholders.”

Mr Brown’s report also demanded improvements in the UK franchise award process, calling on Government to cut the length of deals and set guidelines on the capital required of bidders.

In the meantime, ScotRail’s franchise has been extended by five months by the Scottish Government to a new end-date in March 2015 with transport secretary Keith Brown telling Holyrood there would be no “risky shortcuts” on re-franchising north of the border.

Commuters from north of the Tay have railed against the high and ever-increasing cost of train services in recent weeks, after The Courier revealed how a “Tay Tax” afflicts those travelling from outside so-called regulated zones.

That prompted a Transport Scotland admission of “anomalies” within the country’s fare structure, which it has pledged to examine and address.

First also said its UK bus operations had seen like-for-like revenue growth of 2.1% in the three months to the end of December, despite a challenging environment and thanks, in part, to a recovery plan which includes a programme of disposals.

However, the firm said it accepted there remained “considerable work to do” across the division.

Its US Greyhound business which saw 1.6% revenue growth was described as “sluggish”, while American school bus operations are expected to take a $15 million hit thanks to the disruption caused by the major storm Sandy.

Chief executive Tim O’Toole said trading was “in line with expectations” once one-off costs related to the disaster were excluded.

business@thecourier.co.uk