Stagecoach CEO quits over US setback

The bus and rail group Stagecoach yesterday announced the shock departure of its chief executive, Keith Cochrane, and warned that it may be forced to sell its troubled North America business Coach USA.

Mr Cochrane's resignation was accompanied by a one-third cut in the dividend and a fresh profits warning, which wiped 27 per cent off the Stagecoach share price.

Brian Souter, the founder and chairman of Stagecoach, said he was "deeply saddened" at the departure of Mr Cochrane, which has been prompted by a further deterioration in the performance of Coach USA in the first two months of the current financial year.

Mr Cochrane resigned at a board meeting last Friday after refusing to lead a wide-ranging review of the American company. He was on a one-year contract and is in line for a pay-off of at least £500,000.

Mr Souter has agreed to become acting chief executive until a full-time replacement is found while the job of chairman has gone temporarily to the group's senior independent director, Robert Speirs. Mr Souter said the review would look at all options including the sale of all or parts of Coach USA, which Stagecoach bought for £1.2bn three years ago.

The American business has been a running sore for Stagecoach since it was acquired in 1999. Last year Stagecoach sacked Coach USA's chief executive, Randy West, axed 550 staff including 40 per cent of its head office and took 330 buses out of service. It also announced a £375m write-down in the value of the business. At the time, Mr Cochrane pledged that shareholders would begin to see an improvement in the performance of the business this year but that has failed to materialise. His fate appears to have been sealed by a further deterioration in Coach USA's performance in May and June when revenues were down by 8 per cent. Stagecoach said it expected operating profits from the division to be flat this year.

Coach USA's operating profits last year fell by 39 per cent to £41.2m on turnover down slightly at £682m.

Mr Souter said Coach USA had been hit badly by 11 September, the general American economic downturn and the decline in leisure spending. But this was not enough to explain the deterioration in performance in recent weeks particularly in its charter, tour, airport, taxi and sightsee- ing businesses.

Mr Souter said that "everything is up for grabs" in the review. However, he added: "My intuition is that it is unlikely we will come out of North America completely because it is not a good time now to sell the business."

The decline in Coach USA's performance contributed to a 13 per cent fall in group profits to £107m in the year to April 30. The final dividend has been cut from 2.5p to 1.3p, giving a total for the year of 2.6p, down from 3.8p.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Software Development Manager

£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Product Manager - (Product Marketing, Financial Services)

£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Day In a Page

As in 1942, Germany must show restraint over Greece

As in 1942, Germany must show restraint over Greece

Mussolini tried to warn his ally of the danger of bringing the country to its knees. So should we, says Patrick Cockburn
Britain's widening poverty gap should be causing outrage at the start of the election campaign

The short stroll that should be our walk of shame

Courting the global elite has failed to benefit Britain, as the vast disparity in wealth on display in the capital shows
Homeless Veterans appeal: The rise of the working poor: when having a job cannot prevent poverty

Homeless Veterans appeal

The rise of the working poor: when having a job cannot prevent poverty
Prince Charles the saviour of the nation? A new book highlights concerns about how political he will be when he eventually becomes king

Prince Charles the saviour of the nation?

A new book highlights concerns about how political he will be when he eventually becomes king
How books can defeat Isis: Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad

How books can defeat Isis

Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad
Judith Hackitt: The myths of elf 'n' safety

Judith Hackitt: The myths of elf 'n' safety

She may be in charge of minimising our risks of injury, but the chair of the Health and Safety Executive still wants children to be able to hurt themselves
The open loathing between Barack Obama and Benjamin Netanyahu just got worse

The open loathing between Obama and Netanyahu just got worse

The Israeli PM's relationship with the Obama has always been chilly, but going over the President's head on Iran will do him no favours, says Rupert Cornwell
French chefs get 'le huff' as nation slips down global cuisine rankings

French chefs get 'le huff' as nation slips down global cuisine rankings

Fury at British best restaurants survey sees French magazine produce a rival list
Star choreographer Matthew Bourne gives young carers a chance to perform at Sadler's Wells

Young carers to make dance debut

What happened when superstar choreographer Matthew Bourne encouraged 27 teenage carers to think about themselves for once?
Design Council's 70th anniversary: Four of the most intriguing prototypes from Ones to Watch

Design Council's 70th anniversary

Four of the most intriguing prototypes from Ones to Watch
Dame Harriet Walter: The actress on learning what it is to age, plastic surgery, and her unease at being honoured by the establishment

Dame Harriet Walter interview

The actress on learning what it is to age, plastic surgery, and her unease at being honoured by the establishment
Art should not be a slave to the ideas driving it

Art should not be a slave to the ideas driving it

Critics of Tom Stoppard's new play seem to agree that cerebral can never trump character, says DJ Taylor
Bill Granger recipes: Our chef's winter salads will make you feel energised through February

Bill Granger's winter salads

Salads aren't just a bit on the side, says our chef - their crunch, colour and natural goodness are perfect for a midwinter pick-me-up
England vs Wales: Cool head George Ford ready to put out dragon fire

George Ford: Cool head ready to put out dragon fire

No 10’s calmness under pressure will be key for England in Cardiff
Michael Calvin: Time for Old Firm to put aside bigotry and forge new links

Michael Calvin's Last Word

Time for Old Firm to put aside bigotry and forge new links