A DOUBLE EDITION

Today we place two reports on the website, first the selection of operators for two rail franchises across the North of England and second a set of interim results for Stagecoach Group PLC.

 

 

TRANS PENNINE FRANCHISE AWARDED TO ARRIVA

The Government intends to award Northern franchise to Arriva Rail North Ltd, and TransPennine Express franchise to First Trans Pennine Express Ltd.

Rail journeys between Scotland and England will undergo a massive transformation, thanks to a significant package of improvements being delivered in a new franchise deal, announced by the government this week.

It has been announced that it intends to award the TransPennine Express franchise to First Trans Pennine Express Limited, in a deal that will deliver brand new, state of the art high-speed trains on cross-border routes, extra services from Glasgow, Edinburgh and Motherwell to the north of England, and free Wi-Fi on trains and at stations.

In a separate award Arriva Rail North Limited  has been awarded the contract to run regional and commuter services across the north of England – the 2 operators will oversee a massive £1.2 billion boost to rail services across the north of England and into Scotland, with more seats, more services and a host of improvements to deliver a modern, 21st century passenger experience. The contracts will run from from April 2016 until March 2023.

More than 500 brand-new carriages, the removal of the outdated and unpopular Pacer trains, room for 40,000 extra passengers at the busiest  times, and more than 2,000 extra services a week will all be delivered.

First Trans Pennine Express Limited will invest more than £400 million in new rolling stock across the franchise, and in Scotland, they will introduce:

• 31 brand new, state of the art 125 mph trains – equivalent to 155 carriages - running on cross-border services on the East Coast and West Coast Main Lines
• a new, direct Liverpool to Glasgow service from December 2018, with new electric trains additional services from Manchester to Glasgow and Edinburgh from December 2017, including stops at Motherwell, plus extra weekend services
• a new hourly service to Edinburgh from Newcastle, via Morpeth, extending the existing Liverpool to Newcastle service
• free Wi-Fi on trains and at stations by July 2018, with media servers on trains providing entertainment and information to smartphones and tablets
• discounted advance fares for 16- to 18-year-olds and jobseekers.

The government will receive £400 million in premiums from First Trans Pennine Express Limited over the life of the franchise; previously, the franchise was subsidised by the government. The amount of annual subsidy the government pays for the Northern franchise will be reduced by £140 million by the end of the 9-year contract.

Following the announcement, and in accordance with usual procurement practice, there will be a standstill period of 10 days before the department will be in a position to enter into, and complete, the formal contractual documentation and make the awards.


STAGECOACH INTERIM RESULTS

Stagecoach have published their Interim Results for the six months ended 31 October 2015. They say that they are "good financial results, in line with expectations"

·      Adjusted earnings per share* up 12.6% to 17.0 pence (2014: 15.1 pence)

·      Interim dividend per share up 9.4% to 3.5 pence (2014: 3.2 pence)

·      Investing for growth in regional UK bus markets

o  new mobile-friendly website and digital functionality for customers

o  smart multi-operator ticketing in English city regions

·      Accelerated expansion of megabus.com coach operations in Europe, while North American mileage re-balanced to current demand

·      New East Midlands Trains franchise and plan to extend West Coast Trains

·      Successful re-financing of £400m bonds, with good financial position maintained

·      Cautious outlook

o  Recent revenue softer than expected in UK Bus regional operations

o  Lower rate of rail and inter-city coach revenue growth since mid-November in UK/Europe

o  Modest revision to full-year expectation of adjusted earnings per share

Chief Executive, Martin Griffiths, said: 

"These are a good set of results with overall earnings per share in line with expectations.

"We have continued to invest in making travel better and easier for our customers. Public transport is a shared responsibility between the public and private sectors. It is crucial that the investment of transport operators is matched by steps by the public sector to tackle the growing challenge of road congestion, which is holding back the potential of the bus. At the same time, shrinking public investment in local transport can impact on the cost of travel and the network of services. We look for efficiencies within our own businesses to protect our customers as far as we can from any impact of Government cuts.

"Our bus passengers in the UK are now benefitting from our new UK Bus website, which enables them to check live running times for their bus services and purchase travel on their smart phones. In 2016, we will also introduce a new mobile bus app. In addition, we are on track to complete delivery of smart multi-operator bus ticketing in England's main city regions within the next few weeks.

"Our rail businesses have demonstrated the benefits of a commercially-led approach, with passenger revenue growth and ongoing investment in improved facilities and better information for customers. We are working closely with Government and Network Rail to deliver new trains, greater capacity and more train services.

"We are pleased that the Department for Transport has agreed to extend our operation of East Midlands Trains and plans to extend Virgin Rail Group's operation of West Coast Trains. This will allow us and Virgin to continue to deliver improvements to our customers, attract more people to rail travel and increase the future value of these franchises to Government.

"In North America, we have taken steps to mitigate the impact of lower motoring costs on demand for our megabus.com inter-city coach services by better matching the level of vehicle mileage to current demand.  The rest of the North America Division is performing in line with our expectations.

"Overall, the Group is in good financial shape and we were pleased to have put new bond financing arrangements in place earlier this year. Challenges remain in our sector in the short-term but the underlying strength of our businesses across the UK, continental Europe and North America, means we are well placed to drive value for our customers and investors."