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Newcastle transport group Go Ahead, one of Britain’s biggest bus companies, has been forced to lower its outlook for the year after the £11m Manchester bus depot it bought from FirstGroup failed to meet expectations.

The five months since it took over in Manchester has not been enough to bring the service up to the standard that customers expect, the company said. It will need more time to make improvements, although some have already been put in place.

Go Ahead paid FirstGroup £11.2m for 163 buses in the city in February.

Chief executive David Brown: “The integration of our new bus company in Manchester, combined with cost pressures in some areas of the business, has slightly lowered our expectations for this division’s financial performance for the full year.”

It comes two months after the company launched Britain’s first tap-on tap-off service outside London - in Brighton in September. Around a quarter of journeys are paid for using the method.

Mr Brown added: “I firmly believe in the fundamental strength of our bus business. Buses have a significant role to play in transforming the way people travel and in slowing the rate of climate change.”

The company said it is in talks with the Government over the future of its Southeastern rail franchise.

It was awarded a nine-month extension on the line earlier this year after the Department for Transport cancelled a competition for the new contract while waiting for the Williams Review on the future of rail.