26th Mar 2021 10:19
(Alliance News) - Stagecoach Group PLC on Friday said government payments to bus companies should continue for longer than previously expected.
Shares were up 3.6% to 97.21 pence in London.
The Perth, Scotland-based public transport operator expects UK government grants for bus services in England to continue until "mid to late summer 2021". That will cover the period after social distancing is scheduled to be no longer required, from June 21, Stagecoach said. It had previously assumed support would continue until March 31, according to half-year results released in December.
Scottish government grants have been extended until June 27, and a new scheme in Wales will run until July next year.
Stagecoach said it expects to continue generating positive operating profit while support remains in place.
The company's outlook for the financial year ending May 1 is unchanged from December. While there is high uncertainty in the short term, Stagecoach is confident that sales will grow as lockdown restrictions are eased. It said sales at the regional bus business are currently around 46% of the 2019 level, down from 60% last autumn.
Stagecoach is more bullish for the long term, thanks to the "significant funding" for bus services included in the UK government's National Bus Strategy for England.
The company is in a "solid financial position", having seen further positive cash flow since half-year results were announced on December 9.
"We remain confident that there is a strong and positive future for public transport as we emerge from the Covid-19 pandemic. Government commitments in the recently published National Bus Strategy provide a huge opportunity to fundamentally transform mobility in our communities," Chief Executive Martin Griffiths said.
Stagecoach is due to release results for the 2021 financial year on June 30.
Stagecoach on Thursday had criticised Manchester mayor Andy Burnham's decision to proceed with a bus franchising plan, saying he should wait for the outcome of a judicial review process.
The bus and train operator said it was "disappointed and surprised" by the decision, as a judicial review over the franchising scheme, which Stagecoach applied for, is scheduled for May 27 and 28.
The franchising plan will give the local government the power to set fares, timetables and routes. Stagecoach opposes it, saying it will cost taxpayers GBP135 million and lead to above-inflation fare increases.
"While we await the decision of the court, we remain ready to work collaboratively with the mayor and the combined authority," Stagecoach said on Thursday.
By Ivan Edwards; [email protected]
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