Transport group Stagecoach has said environmental fears and higher fuel costs were sparking a “fundamental shift” towards public transport as it unveiled big revenue rises for bus and train operations.
The Perth-based firm said like-for-like revenues rose 13.6 per cent at its train arm – which includes South West Trains and East Midland Trains – and 7.5 per cent at its UK bus division.
They helped the group post underlying pre-tax profits of £174.4 million for the year to April 30, marginally ahead of market expectations.
Chief executive Brian Souter said: “We believe there are growing signs of a fundamental positive shift in customer attitudes towards public transport, driven by increasing road congestion, rising fuel costs and concern about climate change.”
He said the current financial year had started well, and was encouraged by the “significant potential for further modal shift from the car to bus and train travel”.
Stagecoach’s 49 per cent shareholding in Virgin Trains, which operates on the West Coast Main Line, delivered £32.2 million in pre-tax profits for the year, up from £18.9 million.
The franchise posted like-for-like revenue growth of 11.2 per cent.
Stagecoach said a planned upgrade for the line should deliver a 30 per cent rise in capacity from this December.
But it warned there was “significant risk” that track maintainer Network Rail may not deliver an upgraded railway that is “acceptable to Virgin Rail and its passengers”.
“We continue to monitor developments carefully,” Stagecoach said.
Broker Investec said although the outlook for the company remained robust it had not been persuaded to upgrade its estimates.
Analyst Joe Thomas said: “While we recognise that it is one of the best managed businesses in the sector, we remain concerned over the prospects for South West Trains in the event of a consumer slowdown.”
But Bob Crow, general secretary of the Rail Maritime and Transport union, accused Stagecoach of putting profits ahead of service and safety.
He said: “Passenger numbers on South West Trains are up by nearly six per cent, but they want to slash ticket-office opening times on well over 100 stations.
“That puts up to 140 jobs under threat and undermines service and safety for staff and passengers alike and it is unacceptable.
“People want to see more staff on stations, not fewer, and it is time for the government to stop rail privateers milking ever-bigger profits out of what should be a public service and not a cash cow.”
Stagecoach is expecting its fuel bill to rise by nearly 25 per cent to £140 million.
Finance director Martin Griffiths said the company’s costs would go up with the soaring oil price, but added that the counter effect of those abandoning their cars for public transport would help to offset the problem.