Bus and train operator increases profits by 40%

Aug 23 2008 by Alex Turner, Liverpool Daily Post

MERSEYSIDE’S biggest bus operator, Arriva, yesterday announced a 40% rise in half-year pre-tax profits to £66.3m.

The group, which runs more than 16,000 buses and trains across the UK and Europe, saw its results boosted by the addition of CrossCountry rail franchise, which stretches from Aberdeen to Penzance, to its UK trains division.

The Sunderland-based firm said operating profits for the UK rail arm jumped to £14.8m from £1.1m a year earlier, which accounted for more than half of the group’s £19m rise in profits. Overall, group revenues were 59% higher at £1.44bn.

The company’s Arriva Trains Wales operation, which has routes through Chester and Warrington, also contributed to the improved performance of the UK rail division.

The group hit passengers with a 4.8% increase in peak fares at the start of the year, with off-peak tickets rising by an average 7%, well above the industry average of 5.4%.

Arriva warned higher fuel prices and the economic downturn presented challenges, but said its fuel costs this year were “substantially fixed” with two-thirds of the requirement for 2009 also secured in advance.

The company’s UK bus division increased operating profits by 20% to £45.5m, based on a 14% rise in revenues to £454.5m.

Arriva said “encouraging” passenger growth reflected marketing initiatives and the wider take-up of concessionary travel. It added that more than 460 new buses would enter service this year.

Chief executive David Martin said: “Higher fuel prices and toughening economic conditions present challenges for the industry, but bring with them the possibility of higher demand for our transport solutions.”

In mainland Europe, Arriva generated revenues of £626m and saw operating profits increase by 24% to £34.9m. The improvement reflected new contracts and the increase in the value of the euro.