Travel downturn hits Go-Ahead profits

Go-Ahead Group, the rail, bus and air transport company, warned yesterday that this year would see profits hit by tougher trading conditions.

The company reported financial results for the six months to 29 December that showed the impact of disruption to air and rail travel during the period. Profits inched ahead by £1.1m to £21.2m despite a huge jump in turnover.

Go-Ahead said the difficulties would continue this year but added that its bus division was proving more resilient.

The group's shares closed down 6 per cent, at 550p, as analysts prepared to trim their reduced 2002 profit forecasts.

The crisis in Britain's rail industry and the drop in air travel following the 11 September terrorist attacks tore into the company's results. It meant that despite a near doubling in rail turnover, as Go-Ahead took on the South Central rail franchise, operating profit in the division slumped to £4.8m for the interim period, from £9.0m the previous year. The fall in employment in London, which cuts down on commuter traffic, and the drop in tourist numbers, both hit demand. All the company's rail franchises are exposed to London.

Similarly, aviation services saw turnover jump from £38m to £84m but profits dropped from £9.0m to £4.8m. In October, Go-Ahead issued a profits warning and let go of 700 of its aviation workers at the time.

"The lower volumes experienced have negated the hoped-for contribution from last year's expansion of our aviation services business," said the chairman, Professor Sir Frederick Holliday.

Buses provided the one bright spot, with profits improving from £14.8m to £17.6m. Go-Ahead said there were signs the rail industry was improving.