The Fab Four?

We’re sure that Brian Souter would like nothing more than to merge Stagecoach with National Express as a prelude to a possible break up of the Nat Ex group. Outside London, Nat Ex’s bus businesses fit well with Stagecoach’s. Travel Dundee & Strathtay. Warwickshire & Travel West Midlands/Coventry. And then there’s the jewel of the National Express coach network itself, with possible operational synergies with Stagecoach.

Rumours of such a merger were reported a week ago in the Daily Telegraph. The paper linked Stagecoach with Spaniards the Cosmen family. Jorge Cosmen sold Spain’s Alsa to Nat Ex in 2005 receiving Nat Ex shares that he now has increased to just shy of 20 per cent.

City analysts were nevertheless quick to denounce the rumour. Friday’s Transit added that a merger “doesn’t seem very likely” because the core financial issues at troubled Nat Ex would remain, affecting Stagecoach.

Yet, Nat Ex is exposed. Its 18-month old East Coast rail operation is a burden that’s expected to derail Nat Ex’s rail division. Even this week, Nat Ex will again make a new plea for government help in meeting premium payments. Speculation in February that Nat Ex might hand in its East Coast rail token, though dismissed, brought interest from Virgin’s Richard Branson. Virgin’s West Coast is, of course, half owned by Stagecoach.

The consolidation within the industry has affected the so-called Big Five only insofar as they are gobbling smaller operators or rationalising among themselves. To date, there are no real indications that the Big Five might become the Fab Four. There’s occasional speculation. Remember 2006? The departure of then Nat Ex chief exec Phillip White linked Nat Ex with First Group. Also that year, Brian Souter himself felt that Stagecoach and the Go Ahead Group were a “good fit”. Naught came of either.

In spite of work on the benefits of the corporate National Express brand, it’s hard to view the bus, rail and express divisions as anything other than separate. In spite of impressive bus operators in Birmingham & Dundee, there’s little opportunity for Nat Ex to do what Stagecoach, First or Arriva buses have done in marketing terms. Maybe Stagecoach could help with that, given a chance...