Stagecoach 'not minting it from rail'

Stagecoach was forced on the defensive yesterday over a jump in profits at its South West Trains operation, where it was accused by unions of "minting it".

Stagecoach was forced on the defensive yesterday over a jump in profits at its South West Trains operation, where it was accused by unions of "minting it".

The train and bus company insisted it was being rewarded for improved performance at its South West franchise, including a punctuality level of more than 90 per cent. The group reported that operating profits at the franchise increased by 10.2 per cent to £48.6m for the year ended April 2005, helping group pre-tax profits climb to £108.3m for the period, up from £95.8m last year.

Half the profits gain at South West came from higher fares, the company said. The remainder resulted from an increase in passengers using the busy commuter service, which brings tens of thousands into London's Waterloo station every day.

Graham Eccles, the head of rail at Stagecoach, said the company had replaced a 40-year-old train fleet since first winning the franchise in 1996. It had spent £1bn on maintenance in that time, he said. "We charge what we believe the market will bear," said Mr Eccles, who is to retire next year. He will be replaced by Ian Dobbs, a former division director of British Rail.

Brian Souter, Stagecoach's group chief executive, said: "We're not piling on the numbers. It's a reward for running a good rail franchise. That's the way the system is supposed to work... This is determined by the Government and the regulatory regime."

Profits also increased 10.3 per cent at Stagecoach's biggest business, its UK bus unit, to £82.5m. Elsewhere the US bus and other overseas bus interests also saw a profits rise, but the company's Virgin Rail joint venture, which runs the West Coast and CrossCountry franchises, saw a slight drop in profits, from £13.5m to £12.7m.

With the group profits boost, Stagecoach ramped up its full-year dividend by 13.8 per cent to 3.3p. The payout means that Mr Souter, who owns a 15 per cent stake in Stagecoach, will pick up a £5.15m dividend cheque for the year. Mr Souter's sister, Ann Gloag, also a company director, will pocket £3.89m from the £35.19m payout to shareholders for the year.

Bob Crow, the general secretary of the RMT union, said: "Like all the privatised rail operators, Stagecoach are minting it at the public's expense. It's no wonder their profits are soaring, they [the private rail industry] get three times the subsidy that British Rail got - it's like winning the national lottery every day. South West Trains bagged £92m in public subsidy in 2003-04, and the two Virgin operations, which Stagecoach owns half of, got more than half a billion."