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September 12 2018
By Mel Holley

A former routeone editor, Mel has more than 30 years’ experience in road and rail transport journalism.

Go-Ahead faces up bus challenge

Go-Ahead has set out its strategy for developing its non-London UK and Ireland bus market. It is also using a range of ‘capital light’ measures for international growth, as it faces a downturn in UK regional bus ridership.

The strategy was revealed as Go-Ahead announced its global bus and rail results for the year ending 30 June 2018, with overall revenue slightly down at £3.4bn, and pre-tax profits up by 6.6% at £145.7m. Its annual dividend is unchanged at £1.03.

David Brown’s strategy is to: “Focus on urban areas with growth potential”

Rail, London and Regional bus each account for one-third of operating profit.

For Regional Bus, Go-Ahead says: “The market environment is presenting us with further consolidation and bolt-on acquisition opportunities. We remain very selective about those which we pursue.”

Its investment in 173 new buses for regional bus was
 reflected in higher depreciation.

In Regional Bus operating profit was down by £1.3m to £45.8m due to the impact of contract losses and bad weather during Q3. 

Despite this revenue per mile is up by 2.2% and journeys per mile are 0.1% ahead of last year, excluding acquisitions.

While margins fell by 0.6% to 11.9% in Regional Bus, they are “still strong relative to the sector.”

Against a background of market trends that Go-Ahead identifies of declining UK passenger numbers, changes in society and consumer behaviours, air quality, congestion in urban areas 
and the impact of the Bus Services Act, Go-Ahead CEO David Brown (pictured) says the strategy is to: “Focus on urban areas with growth potential.

“Deliver high quality services to attract customers; have agile local responses; focus on how buses can solve 
city problems; work in partnership with local authorities 
and take advantage of sensible bolt-on opportunities.”

In its international bus and rail markets it will focus on market entry via contracts rather than acquisition 
- as demonstrated in Dublin - and will be “Capex light – focused on margins and returns.”

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