Work to turn around the National Express Transport Solutions (NXTS) private hire business is delivering “positive early results” but further rationalisation of that undertaking is not out of the question, parent Mobico Group has said.
The ongoing overhaul forms part of a wider restructuring of the National Express coach and bus business in the UK. It began with the decision in October 2023 to close NXTS depots in Gillingham and Lower Sydenham, with Mobico noting then that underlying profitability of the NXTS business was below the level required.
Publication by Mobico of results for the year to 31 December 2023 has revealed that NXTS was in a loss-making position during that period, although a trading update for Q1 2024 released at the same time notes that progress in turning around NXTS continues to be made.
Across Mobico Group, a pre-tax loss of £98.3 million was returned on a turnover of £3.15 billion. The full-year results note that a reduction in commuter traffic via hybrid working is a major reason for the difficulties at NXTS, with that directly cited as resulting in the decision to close the Clarkes and Kings Ferry sites.
In a surprising note, the group adds in its result that private hire and UK holiday work have been slow to return to pre-pandemic levels. While the Touromo holiday brand was closed in 2023, Mobico notes that NXTS “has a significant dependence on the UK private hire and charter market, which has been slow to recover post-COVID.”
Such a position contrasts with anecdotal evidence from other coach operators, where a consensus exists that demand in both of those sectors is unusually high. Mobico adds that is continues to consider all potential options for NXTS, “including further rationalisation and rightsizing.”
As part of wider restructuring that saw Alex Jensen take up the position of National Express CEO of UK and Germany, Mobico says that “decisive action” has been taken to address challenges in the UK business. Included in that is what it describes as a “sharper commercial focus of divisional leadership” and ongoing refinement of its business model.
Ms Jensen arrived after the unexpected departures of predecessor Tom Stables and National Express West Midlands Managing Director David Bradford during mid-2023.
Exemplifying commercial work being done by NXTS is an arrangement with the South Downs National Park. Schools in southern England are being offered discounted travel to over 100 attractions in the park via financial support from the park’s Outdoor Learning Grant.
Through that, schools can apply for between £300 and £500 towards travel costs. NXTS is offering a rate from £295 for those establishments to visit the park between 0900-1500hrs, regardless of whether they are in receipt of Outdoor Learning Grant support.
On its scheduled National Express coach services in the UK, Mobico says that network expansion in 2023 outpaced competitors and that growth across the year was seen in patronage (+25.4%) and yield (+3.7%).
An estimated 600,000 extra passengers and £15 million “profit benefit” were generated by rail strikes, although overall profit from the UK coach division was still impacted by “the continuing disappointing performance in NXTS,” the group notes.
In its bus arm in the West Midlands, National Express says that the impact of a 16.2% drivers’ wage increase backdated to 1 January 2023 cost the business £23.3 million and that strike action around negotiation of that cost a further £2.4 million.
Such pay awards above inflation “are unsustainable” and action including an increase in fares was taken in response. However, commercial bus patronage grew by 8.2% on 2022 to end 2023 at 98% of pre-pandemic levels.
