Rail recovery drives profits surge at First

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The Independent Online

FirstGroup, the UK's second-largest transport group, yesterday underlined how dramatically the rail industry has recovered from the Hatfield disaster by unveiling a 36 per cent rise in profits from its train division.

Earnings from First's four passenger franchises rose to £67.7m last year from £49.8m in the previous 12 months after a surge in both passenger numbers and revenues.

Despite a £12m decline in subsidies to about £350m for the year, revenues from the Great Western, Great Western Link, TransPennine and ScotRail franchises increased by more than £100m to £1.05bn. Passenger growth across the entire rail division reached 5 per cent, but on the TransPennine route passenger income grew by 11 per cent, while on specific services such as those into Manchester airport, the traffic growth reached 29 per cent.

Hull Trains, the non-franchised operation which runs high-speed InterCity services on the East Coast mainline, recorded passenger growth of 20 per cent.

Moir Lockhead, the chief executive, said First was achieving profit margins of 10 per cent on the TransPennine service, but had room to increase its returns before it started to share surplus profits with the taxpayer.

The group is bidding forfour rail franchises - Integrated Kent, Greater Western, Thameslink/Greater Northern and Docklands Light Railway, which have combined revenues of £1.1bn. Three of the four franchises are due to be awarded by the end of the year.

Mr Lockhead played down suggestions that First would have to offer a substantially higher premium to retain the Greater Western franchise following the outcome of the East Coast mainline competition, where the incumbent operator GNER was forced to triple its payments to £1.3bn to retain the franchise.

Mr Lockhead predicted that bids for Greater Western would be "sensible but competitive".

Group profits rose 5 per cent to £128.9m. Profits from its UK bus division fell £4m to £107m.

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