North East bus and rail giant Go-Ahead Group says passenger demand looks set to recover as coronavirus restrictions ease, insisting trading has been robust during “challenging times”.
The Newcastle based business, which runs services including the Go Ahead regional bus network, Govia Thameslink Railway and Southeastern rail service, said 90% of its revenues are secured through contract income, with no risk from slumping passenger demand during the pandemic.
Its London and international bus arm has been boosted by the timing of contract income but it said ongoing uncertainty in the recovery of passenger demand within the regions has stopped it from giving any guidance. It also warned that regional bus profits are expected to plunge by around 50% in the six months to January 2, compared with a year earlier.
Passenger numbers fell sharply during the second national lockdown in England, having seen figures recover to around 50% to 60% of pre-crisis levels before the one-month lockdown. Over the last four weeks, however, those numbers plummeted by around 15% points.
In its trading update the firm said: “While regional bus is expected to make a positive contribution in the year, ongoing uncertainty relating to the recovery of passenger demand prevents us from providing meaningful full-year financial guidance for the division at this stage.”
Chief executive David Brown said: “As set out by the Prime Minister in his 10-point green plan, public transport is vital to achieving the country’s net zero ambitions while supporting economic growth. This, combined with public transport’s ability to support the health and wellbeing agenda, underpins my confidence in the prospects of the Group.
“As a private operator of public transport, we have the experience and skills to help communities thrive by connecting people to jobs, education, shops, family and leisure facilities.
“Prior to the second lockdown, we were pleased to see passenger journeys reaching nearly 60% of pre-crisis levels in some regions, showing people’s desire to travel once restrictions are eased.
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"With enhanced vehicle cleaning, the provision of hand sanitiser and mandatory use of face coverings, passengers can travel confidently on our services that are safe and clean.
“I am immensely proud of the commitment of our 30,000 people and all they have achieved during such a difficult time.”
Go-Ahead offered some cheer to investors, confirming it is working towards paying a dividend at an “appropriate level” in the 2021 calendar year, saying: “We understand how important financial returns are to our shareholders and appreciate their loyalty throughout this crisis, enabling us to continue delivering essential services to our communities.”
Transport experts at Jefferies said: “Improving full-year 2021 expectations and a 2021 dividend as a target should be taken well.”