THE chief executive of FirstGroup has said its Greyhound bus division is suffering because people in the south-western US states are “afraid to travel” as a result of President Donald Trump’s immigration policy.

Speaking after the Aberdeen-based transport giant’s annual meeting, Tim O’Toole also said he would be “more than happy” to pursue the break up of the group's UK and North American operations if it was deemed to be in the shareholders’ interests.

In reference to the tough stance on immigration that helped sweep Trump to power, Mr O’Toole said: “The immigration and [Mexican border] wall discussion has definitely depressed traffic in the south west, where we’re just not seeing the same flows that we have seen in that market and that’s because people are afraid to travel, afraid to move around.”

Greyhound operates routes between the US and Mexico.

“Greyhound is looking pretty good everywhere else, but that part of the country we’re definitely seeing less inter-city movement,” said Mr O’Toole.

He also said low fuel prices across the Atlantic, leading to increase car use, had “hurt” that business – which saw revenue fall 1.4 per cent to £862m last year.

FirstGroup makes the majority of its revenue in the US, through its Greyhound, First Transit and First Student divisions. In the year to March 2017, the US business posted £3.5 billion of revenue; the group’s total was £5.65bn.

Such is the strength of the US business that FirstGroup has faced questions from an activist shareholder over the comparable strength of its home market. Canadian fund West Face Capital took a five per cent stake in FirstGroup last month, raising the prospect that it will push for a break-up of its operations.

Mr O’Toole said it was a “perennial question” for any business operating a number of divisions.

“This isn’t a new subject,” he said. “We look at this all the time, it’s our obligation to look at it and quite frankly it’s not even a threatening idea to us because whatever the right answer is for long term value for the shareholders, we’re more than happy to pursue.”

Noting that at one time it was the strength of the UK’s rail business that was offsetting First Student, he said: “The market changes, our debt profile changes so we keep it under advisement and we will continue to.”

The company faced questions from shareholders over its decision to again withhold a dividend, though some present at the meeting supported the company’s strategy to focus on strengthening its net cash position.

“This should be a dividend paying stock and so I look forward to reintroducing the dividend,” said Mr O’Toole. “It is certainly true that a lot of people have a view slightly different to that shareholder [who called for dividends to be reinstated] and their view is that the upside in the stock will come quicker from deleveraging the company than it will be by putting in a nominal dividend.”

In the UK, Firstgroup and its partner MTR is currently facing a competition and markets authority investigation into its recent winning of the South Western franchise, because it will lead to FirstGroup providing two services between London and Exeter.

Mr O’Toole said he was confident an agreement would be reached before August 20, when it takes over the franchise.

“We believe it is a constructive dialogue and we are confident that it’s going to result in a resolution or guarantees to the public that we will be comfortable with,” he said.

And he said the company’s bid for the west coast mainline, which will include running the HS2 high-speed line when it becomes operational, was “exciting” but will not “trash” the group’s finances, and he would be content if the rail business stayed as it was.

“We have maintained a disciplined bidding approach and we are not going to depart from that. We’re not going to pay over the top so we can have the headline of saying that we got to be the high speed rail operator if it’s going to trash our finances,” he said.