Stagecoach Boosted by Rail Performance

The UK's rail network has undergone somewhat of a revolution in recent months.

Great Britain's East Coast Main Line is one of the cornerstones of the country's rail network linking both English and Scottish capitals. Services run between London and Edinburgh daily, along with additional routes to Leeds, regularly throughout the week providing passengers with reliable and quick links to either major city.

This route has been passed between the private and public sector over the years and when National Express Group was selected for the contract in 2007 it seemed that it would stay in private hands. However, the ownership was short-lived and by 2009, National Express conceded it was unable to fund the franchise and it was handed to the Directly Operated Railways (DOR), set up by the Department for Transport (DfT).

Back in public hands, under the East Coast banner, it ran smoothly with passengers happy with the service and also the loyalty scheme which allowed them to build up points for free trips or other incentives. However, in March 2015 InterCity East Coast won the tender to take over the franchise changing it to Virgin Train East Coast.

The partnership, a joint venture between Stagecoach and Virgin, would take control of the main line through to March 2023. It drew major criticism by rail unions such as the TSSA whose leader Manuel Cortes branded the franchise award "a national disgrace". However, it has provided some good news for one of the owners.

Stagecoach announced on Wednesday (June 24th) that it had recorded an increase in underlying pre-tax profits. It noted that its 2.4 per cent rise to £185 million in the year to April 30th had been helped by a positive performance in its rail division.

The success of the East Coast Main Line had boosted earnings up to £28 million, representing a £2.6 million rise from the same period a year earlier. This was set against a poor performance across the wider UK rail business including South West Trains and East Midlands Trains. Revenue for this area dropped 22 per cent to £26.9 million.

Officials noted that this fall was down to the rise in premium payments to the UK government. However, for Stagecoach it was a real shot in the arm after it was hit hard by tumbling fuel prices in the US. The company, which owns the Megabus brand, noted that the US' drop in petrol costs has had a detrimental effect on it operations.

Despite this blow, Martin Griffiths, chief executive of Stagecoach, was upbeat about the company's performance. He said: "These are a solid set of results notwithstanding continued tight central and local government spending, and increased competition for public transport from the private car driven by lower fuel prices.

"We have a strong set of bus and rail businesses in the UK, mainland Europe and North America. Our successful strategy is focused on providing a good value, high quality travel experience for our customers, and investing for growth over the medium to long-term."


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