SCOTTISH transport giant Stagecoach has said it expects passenger levels to go beyond pre-pandemic levels as buses become a key component in the country’s net zero push, while it is still counting the cost of coronavirus.

The Perth-based company reported underlying pre-tax profits of £17 million for the year to May 1 down from £90.9m the previous year after seeing bus passenger numbers down nearly 90 per cent at one stage during the Covid crisis.

On a statutory basis, pre-tax profits fell to £24.7m from £40.6m and the group confirmed it would not pay any dividends for the year.

HeraldScotland:

Revenue sat at £928m this year against £1.4 billion last year in the adjusted and statutory accounts.

The firm said it remains “confident that there is a strong and positive future for public transport as we carefully follow the roadmap out of the pandemic”.

“The marked reduction in revenue and operating profit reflects the adverse effect of the Covid-19 situation on the performance of the regional bus operations since March 2020. Operating profit from our London bus business increased, underpinned by the contracted business model and reflecting contract wins,” Stagecoach said.

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However, positive profit reflected “decisive action by management to respond to the Covid-19 pandemic and payments from governments ensuring the continuation of public transport services”.

It also noted a reduction in net debt from £352.1m to £312.6m and over £875m of available liquidity at June 28.

Martin Griffiths, Stagecoach chief executive, said he was “optimistic” that demand will recover, with fare-paying passenger sales already bouncing back to stand at 68% of pre-Covid levels as at June 26.

Mr Griffiths said: “What we’re seeing now is that the recovery is coming.

“We’re not going to see any immediate return to passenger levels we had two years ago. It will take a bit of time.”

He said he believes that bus demand will overtake 2019 levels amid the wider net zero push to reduce car and international travel, which he expects will offset the switch to hybrid working.

“Not only will we get back to (pre-Covid levels), but in time, we will go beyond it,” he said.

“Bus travel is going to be critical to the future of the country and the planet.”

The Government has helped support bus operators through the pandemic and Stagecoach said this should ensure it remains profitable.

“We will look to rebuild profitability closer to pre-Covid levels as the Covid-19 restrictions are eased,” it said.

Stagecoach also furloughed some of its staff, but said most had now returned to work, while it confirmed it will keep a tight rein on costs to offset ongoing pressure during the pandemic.

Ben Nuttall, senior analyst at Third Bridge, said: “During the worst of the lockdowns, bus operators like Stagecoach saw just 25% of regular passenger numbers, this was back up to 50% by May and is still climbing. Stagecoach is now beholden to a new set of circumstances beyond their control such as public confidence, hybrid working patterns and the vaccine roll out.”

Stagecoach also faces some “difficult structural issues around congestion, the decline of the high street, and the UK’s changing demographic”, said Mr Nutall, adding “the Government’s bus strategy marks a fork in the road for the UK bus sector”.

Mr Griffiths said: “There is significant potential to deliver healthier and more prosperous places by moving away from towns and cities built around cars to prioritising easy-to-use sustainable public transport and active travel.

"Our investment in new state-of-the-art bus scheduling software will help ensure we have efficient networks that can best meet future travel patterns.

“We have good liquidity, strong fundamentals and excellent ESG credentials.

"We are proud to have finalised our new long-term sustainability strategy and to be a partner in the UK’s first all-electric bus city in Coventry.”

Stagecoach shares closed flat at 82.1p.