Just when transport stock began rallying, news yesterday comes of a 15 per cent drop in First Group shares. First particularly blamed poorer than anticipated US trading by its Greyhound operation (-4.5% October-December 2008). Even so, First remains upbeat about its immediate future. UK rail growth had also slowed but remained at a very respectable +7.2%. The bus side saw +7.6%, owing to people switching to save money. Speculation about a Greyhound start-up on this side of the water may be driven by a renaissance in value for money travel.
With both Stagecoach and National Express seeing redundancies within its rail operations and NatEx in particular having removed duplication within its business divisions, the latest edition of Transit magazine speculates upon whether merger & consolidation might deliver even bigger cost reductions.
Interestingly, Transit also feels that the shares doldrums and a weak pound may now make the UK Big Five susceptible to foreign take-over. As Keolis bowed out of UK bus with the Eastbourne Buses sale, “the French groups might... take the opportunity to expand their UK interests, with Veolia probably the most likely to acquire one of its UK rivals."
Thursday, 15 January 2009
End of an Era?
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Veolia seem to be engaging in a down-sizing of their UK operations. You may recall the recent sale of York depot to Transdev. It was announced yesterday that Lincoln depot will close in March, and their Midlands operation has seen major contract losses over the past few months.
It is expected their operation of the A1 (Sheffield-Rotherham) service from Anston is to cease when the contract expires in July 2009, and further contract losses are predicted for Nottingham depot.
Personally, I'd expect that Hull depot won't be too far behind Lincoln.
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