Train operator earmarks £20m savings

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The Independent Online

Transport firm Stagecoach today said it had earmarked an extra £20 million in savings at its UK rail business after the division's first-half profits fell by more than half.

The Perth-based company, which operates South West Trains and East Midlands Trains, had previously pencilled in savings of £50 million.

Around 400 people have left the division under the cost-savings drive, although the company does not anticipate any more job cuts.

Revenues from the UK rail business rose 1.9 per cent to £512.9 million in the six months to October 31, but operating profits fell by more than half to £14.9 million, reflecting higher franchise payments to the Government and lower revenue growth.

Underlying pre-tax profits across the group fell 28 per cent to £75.5 million during the period, although this was ahead of City hopes.

Stagecoach has helped support rail revenues despite the recession by targeting 'staycationers' with budget ticket deals.

The company's cheaper £10 and £5 tickets were snapped up in the summer for holidays at home and day-trips to London, while bookings on its budget rail product have doubled in the last 12 months and passenger numbers are set to hit more than 500,000.

Stagecoach also runs bus services in more than 100 towns and cities across the UK, stretching from northern Scotland to the south-West.

Like-for-like revenues rose 4.4 per cent to £433 million, but the division's profits dipped slightly to £58.6 million after headwinds including a £8.6 million rise in the firm's fuel bill.

In the US, high unemployment shrank revenues by 6.5 per cent as passengers cut back on discretionary leisure travel while results also suffered on the weakness of the pound.

Chief executive Brian Souter said trading so far in the second half of the financial year was in line with management hopes.

He said: "We have performed well in the face of the continuing challenging economic environment and increased cost pressures.

"This performance has been achieved by providing safe, high quality, value-for-money bus and rail travel."

Stagecoach was previously interested in a merger with struggling rival National Express, and said it was "disappointed" that a deal could not be agreed.

National Express was concerned the merger could not be carried out before the end of the year, putting it in breach of its lending terms.

Gerry Doherty, general secretary of transport union TSSA, said: "Taxpayers are subsidising Souter and (Sir Richard) Branson by over £200 million a year to jointly run Virgin Trains, which is the most expensive rail line in Europe.

"It is the economics of the madhouse that we subsidise multi-millionaires who then rip us off with sky-high rail fares and car parking charges."

Mr Doherty went on: "The Government is giving over £700 million a year to private rail companies when it should be calling a halt to the daylight robbery that Mr Souter has been getting away with in his rail companies.

"It is time to end this Whitehall farce and bring rail back into public ownership like the rest of Europe."

Panmure Gordon analyst Gert Zonneveld said: "Trading in the current financial year is in line with management expectations but challenges remain.

"Declining GDP and employment numbers is impacting rail volumes and the company has identified annual cost savings of £70 million."

Ms England said later that it was thought two people had fled the scene following the crash.

She said: "We now believe two other persons have made off from the accident and we would urge anyone with any information on that to please come forwards so we can trace these people and speak to them."

She said it was not known whether the pair who left the scene were male or female.