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O'Toole predicts success with latest measures

FIRSTGROUP chief executive Tim O'Toole has sought to distance himself from the company's past as the transport group pledged that measures such as a clamp down on pay rates for new bus drivers and burgeoning demand from young people would help to boost profits.

DRIVE TO SUCCEED: Former London Underground chief Tim O'Toole wants to tap in to youth market as young driver rates drop. Picture: Getty
DRIVE TO SUCCEED: Former London Underground chief Tim O'Toole wants to tap in to youth market as young driver rates drop. Picture: Getty

The wooing of the investment community comes just months after the Aberdeen-based train and bus operator raised £615 million to shore up its finances.

The group also faces a challenge from activist investor Sandell Asset Management, which wants it to sell several units.

Mr O'Toole said: "While there remains a significant amount to be done, we are making progress in returning to the strength necessary to drive sustainable, long-term shareholder value."

At a capital markets day, senior executives at FirstGroup were damning of its past performance.

Giles Fearnley, managing director of FirstGroup's UK bus business, which had struggled in Scotland and northern England, criticised its previous "poor customer proposition" and "local authority despair" with the way it was run, according to slides released by the group.He slated past above-inflation fare rises and under-investment before a reform drive launched in 2012.

The comments cast a shadow over the final years of Sir Moir Lockhead at the company he built out of council-owned Grampian Regional Transport, and the early months of Mr O'Toole's tenure after the former London Underground chief took over in 2010.

Under cost efficiencies, FirstGroup cited pay rates for new bus drivers and staff terms and conditions. It also hopes that an improving economy from 2015 and falling numbers of young drivers will boost demand for bus services.

FirstGroup gets 24% of its bus revenues from Scotland. Glasgow, with turnover of £133m a year, is its largest bus unit.

The company wants to boost profit margins at its UK bus arm to double digit levels.

This is part of a wider drive to increase revenues, excluding its UK rail arm, which is constrained by contracts, at a faster rate that the economies it operates in.

Another priority is to turn around its First Student school bus business in the United States.

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