FirstGroup chief executive Tim O'Toole resigns after bus and train operator sinks to heavy loss

Company runs buses across the UK as well as the Great Western, South Western and TransPennine rail franchises

Company slumped to £327m loss from a £152m in the previous year after being hurt by a number of loss-making franchises

FirstGroup boss Tim O'Toole has resigned with immediate effect after the transport company reported a full-year loss of £327m.

FirstGroup runs buses across the UK as well as the Great Western, South Western and TransPennine rail franchises. The company made a £152m profit in the previous year but has been hurt by a number of loss-making franchises.

It was forced to take a £110m hit on the TransPennine contract and a further £277m charge linked to its Greyhound bus service in the US.

The company's shares crashed almost 13 per cent after the news.

Greyhound has been struggling as ultra-low-cost airlines expand across the US with significant extra capacity and also connecting a growing number of secondary airports.

“The growth in these businesses represents a meaningful shift in US travel patterns," FirstGroup said.

"Our ability to mitigate these revenue challenges through further cost efficiencies is limited by ongoing increases in fleet maintenance and driver costs, resulting in a significant reduction in Greyhound's margin.”

Profits at Greyhound slumped 39 per cent to £25.5m, leading FirstGroup to consider all options including a sale of the business.

Mr O’Toole said that the “time is right” to step aside, as the firm revealed the worse-than-expected figures.

FirstGroup’s executive chairman Wolfhart Hauser will become interim chief executive while the company searches for a replacement. Finance boss Matthew Gregory will take on the role of interim chief operating officer.

Revenue rose from £6.4bn compared to £5.65bn and operating profit dropped from £339m to £317m.

Mr Hauser said: “The board is examining all appropriate means to mobilise the considerable value inherent in the Group.

"Initial actions from its evaluation are underway, including conducting a full external review of Greyhound's business model and prospects, which will conclude in the coming months.”