Musical Chairs

You can’t help wondering whether Transdev London United and Transdev Yellow Buses got the better deal in yesterday’s round of musical chairs. Time, of course, will tell.

As some predicted in the early new year, both TYB and London United (plus the NSL Services business formerly owned by NCP that transferred to London Sovereign) pass to Régie Autonome des Transports Parisiens (RATP), the French state-owned company responsible for operating much of Paris’ public transport. This is a condition of the merger of Veolia and Transdev. RATP has given up its 25 per cent stake in Transdev in exchange for the outright acquisition of the two former Transdev assets (and others, in Europe).

One wonders, therefore, whether others have perhaps come off less well. The rump of London Sovereign and the former Blazefield companies continue within the new Transveolia combine, together with Veolia’s existing subsidiaries in south Wales and elsewhere. To a high degree, their futures now depend upon which management management style surfaces, whether this has a Transdev or, as suggested, a Veolia focus. On the other hand, it may be that poorer performing current Veolia subsidiaries could find a much-needed elping hand. Given Blazefield's perhaps at the opposite extreme to Veloia, the bolting together of these businesses does seem unnatural, with one arm potentially weighing down the other. And the split means a loss of current and future economies of scale.

In terms of scale, it seems short-sighted to split London United and London Sovereign into distinct operators. It might, however, have a marginally positive impact on competition for TfL contracts.

Also yesterday, of the possibility of consolidations involving National Express, new chief executive Dean Finch stated, “I don't see any compelling logic why there should be any other consolidation [than Arriva’s]. NatEx is not looking to buy rivals, we’re focused on the current business.” Hmmm. NatEx may have rebuffed both First & Stagecoach for the time being but I’m not sure I’d rule out further consolidations. As for being in a position to buy, has NatEx recovered sufficiently, anyway?

Underlying NatEx’s weakness was the revelation that a third of NatEx’s 1,900 buses are VORed for repairs each day, compared to a norm of nearer 10 than 20 per cent. Quite an overhead to carry. Finch stated he was to take direct control of his business to remedy such matters. More positively, NatEx reported that its coach & rail businesses have done well in repatriating people following the Icelandic volcano eruption, with an extra 12,000 journeys. He did not rule out further job cuts, though.