Bus giants buoyed by fresh emergency cash

The Department for Transport (DfT ) has unveiled additional funding totalling £169 million over the next three months to protect bus services for key workers and those dependent on the bus network to make essential trips for food during the crisis.

The commitment comes shortly after Scottish ministers pledged emergency support to bus firms to maintain essential services in Scotland. That will see the Scottish Government maintain payments of concessionary revenue, and Bus Service Grant Operator payments at levels anticipated before the Covid-19 outbreak.

Perth-based Stagecoach said while it was still too early to “reliably estimate” the effect the escalating crisis will have in the short-term, “the measures announced reduce the risk of substantial ongoing operating losses.”

The company added that, since it last updated the market on March 23, commercial sales at its local regional bus companies had been at around 15 per cent of “normal levels”. The amount of mileage carried out by those companies has dropped to around 50% of typical levels, with the company planning to reduce that further, to 40%, over the next week.

Stagecoach has now put a “significant proportion” of staff employed by its local regional bus companies on furlough to offset the downturn in demand, under plans to furlough around 55 per cent of drivers and engineers. It was unable to provide specific numbers on the employees affected.

Those moves are among a raft measures Stagecoach is taking to conserve cash as it comes to terms with the fall-out of the pandemic.

It is temporarily winding down operations of megabus.com inter-city operations in England and Wales, with all services to be suspended from Sunday (April 5). The emergency funding from government does not cover these services

The company said it has also reduced fuel hedging to take account of account of the lower mileage being undertaken by its regional bus companies.

It previously said directors’ pay would be cut by 50% and there would be no bonuses or pay rises for bosses when it updated the market on March 23. It also said then there would be no plans to pay further dividends in respect of the year to May 2, which it repeated yesterday, and that capital expenditure would be reduced.

Chief executive Martin Griffiths said: “I am proud of the tremendous efforts and sacrifices of our people and the country’s healthcare workers during such a challenging and uncertain time. We are continuing to work hard to ensure Stagecoach comes through this difficult period well placed for the significant long-term opportunities that we still see for public transport.

“We would like to thank the respective governments and our local authority partners for their support through this very challenging period. It is welcome recognition of the importance of maintaining bus services at this time.”

First Bus owner FirstGroup said the emergency funding from the DfT would ensure “continuity of operation” for those who continue to rely on the bus network, including key workers such as NHS staff. The company said it has seen fare-paying passenger revenue and concessionary volume declines of around 90% since the pandemic began.

Chief executive Matthew Gregory said: “I am pleased that by working with the DfT, devolved government and local authorities, we are demonstrating that we are able to secure the necessary support to continue running bus services, recognising the unique and essential role they play in sustaining our local economies and communities. These arrangements will enable us to continue working closely with councils and our other local stakeholders to ensure that key workers can reach their destination, be it hospitals, supermarkets or distribution centres.”

Shares in Stagecoach closed up 4.5% at 69.35p. FirstGroup shares closed up 10.1% at 52.3p.