FirstGroup's bus turnaround on track

Transport giant FirstGroup said the turnaround of its UK bus arm is going to plan, but passenger revenues growth is slowing in its UK rail business.

The UK's biggest bus operator said bus revenues increased 2.4% in its final quarter to the end of March - an improvement on third-quarter growth of 2.1%.

It also revealed the sale of eight bus depots in London for £80 million, part of plans to offset tough conditions and build "sustainable" passenger and revenue growth.

But the company said fourth quarter UK rail revenues were up 5.9%, a slowdown on the 8.1% underlying growth in its third quarter, which covers the three months to the end of December.

The group has around 8,000 buses operating in 40 towns and cities across the UK, carrying 2.5 million passengers every day. The prolonged economic downturn has weighed heavily on many of the urban areas it operates in, particularly in the North of England and Scotland, while higher fuel costs and lower Government subsidies have also impacted.

The company said: " We are working through our comprehensive plan to recover performance and equip our UK bus business to achieve sustainable revenue and patronage growth, and are seeing early positive signs in some of our markets."

UK bus revenues were up 2.4% for the full-year on an underlying basis.

The Aberdeen headquartered group said UK rail revenues increased by 7.4% on a like-for-like basis during the year, with roughly half of this coming from increasing number of passengers and half from higher fares.

Rail companies increased average fares in January by 3.9%, according to the Association of Train Operating Companies (Atoc).

The company operates around a quarter of Britain's rail lines through franchises such as First Great Western and First ScotRail, while it operates 70,000 school and transit buses in North America. It carries more than 300 million passengers a year on its trains in the UK, but did not quantify the passenger growth during the year.

The Government recently handed FirstGroup a 33-month extension to the Great Western franchise, meaning the new franchise winner will run the line from July 2016.