Birmingham-based National Express saw profits at its UK rail arm jump nearly 30% as environmental concerns helped boost passenger levels, it has announced.
Underlying operating profits from the division - featuring Gatwick Express, Midland Mainline and London commuter services c2c and National Express East Anglia - rose to £63.3 million after passenger growth of 6% last year. Underlying rail revenues were up 11%.
National's UK coach division - primarily the National Express network - saw revenues rise 6%, with 3% passenger growth. And bus revenues lifted 7%, with profits from the division also increasing for the first time in six years.
The company's bus division operates more than 2,000 buses, employing 7,250 people in the West Midlands, Dundee and London. Chairman David Ross said: "It is becoming clear that wider recognition of the environmental credentials of public transport over the car and the plane is contributing to the increased use of our services."
Underlying profits for the group, which also runs services in the US and Spain, came in slightly ahead of market expectations at £205.6 million, up 11% from 2006.
National shares rose by more than 4% today.
Mr Ross said: "Despite the current economic backdrop, all operations have started the year well and we have seen no adverse impact on current trading."
Underlining his confidence about the future, he committed to increasing dividends by 10% a year for the next three years.
National Express said its c2c train franchise - which operates between London and Essex - was the best performing railway in Britain, currently holding the industry's annual average punctuality record of 94.63%.
The group's National Express East Anglia route - which has been renamed from "One" - also made an "excellent" contribution to profits as punctuality levels rose to more than 90% last year.
The group said winning the flagship East Coast Main Line route between London and Edinburgh in December would strengthen its train business.
Underlying profits from the UK coach arm were down from £23.7 million to £23.1 million. The division suffered £4.3 million of start-up losses from its Dot2Dot shared-ride airport transfer service which launched in November. National said the venture was performing well, with more than 70 vehicles in the fleet.
Profits at the bus division were up to £43.5 million, from £40 million. The standout performance was 10% passenger growth on six routes through Birmingham, Walsall and West Bromwich following a service upgrade.
Revenues at National Express' North American school bus business grew by 8%. And the group's Spanish bus and coach operations improved revenue by 19% with the acquisition of Continental Auto making it into the country's largest private operator.
Broker Numis Securities said National's UK rail arm had been the "star" performer last year, with profits coming in well ahead of its estimates.
"Growth is healthy and the East Coast franchise appears to have started well," said analyst Joe Thomas