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The government have announced an aid package for bus companies . Very shortly the skool kids will be off back to their places of tuition and with winter approaching passenger numbers should pick up a bit. This company will weather the storm but as I hold it for the dividend I have been hit hard. The share price was fairly static but has slowly sunk. With no dividend it is going to be a long haul back.. Having sold a few earlier I have held the rest as I am not prepared to sell at a loss..
What is the difference between and bus and a plane. On a bus you can open a window perhaps but seating wise? A friend of mine went on a bus and as it trundled along it was leaving loads of passengers at the stops. Nearly empty but full up!! Most were older people so they are probably still there ?? I have held my shares here for a long time but am not looking forward to the updates!!
For sure, it has been a long time coming but the Government’s 2020 Budget plans for public transport development are quite expansive. The full details will be given in the Comprehensive Spending Review to be published in July together with The National Bus Strategy.
Importantly, the Government has earmarked £4.2 billion for eight combined Mayoral Authorities to develop local transport links. This dovetails with the powers given to elected Mayors via The Bus Services Act 2017. Rotala may get squeezed out by the big operators. But I suspect the authorities want a shake-up rather than business as usual. And this appears to be part of a broader Government strategy of reducing car travel and increasing social mobility. It’s also worth noting that Manchester is the most advanced in utilising these powers and Rotala has a strong base there with scope to expand without adding greatly to its fixed overheads.
The smart money is abandon the few rural customers and incorporate the day time stand age into the schools services. Less wages to pay because drivers can become part of the gig and less wear and tear on the fleet.
The local council sponsors the bus company to run a few rural services during school hours. A lot of bus companies make their money from taking children to school which the council pays them for. The council brains of Britain decide to cut the sponsorship during the day totally abandoning the few rural customers many of whom get on to social services for expensive alternatives. Then the bus company says to the council it is costing us too much money to stand the buses in between the school contracts so we will either have to put up the cost of school transport or dispose of the buses and the council can buy their own. The result is farcical but that is happening all over the country because my experience is the people at the councils are lemons..
On Friday 28th June, the Greater Manchester Combined Authority agreed to press forward with the conclusions of the report. In the next stage, the report will be audited by an independent third-party to ensure its integrity. It will then be put out to public consultation.
Manchester, in my view, is likely to be the first city with an elected Mayor to use the powers given it by the Bus Services Act 2017 to refranchise its bus service. The introduction of a London-style system appears to put Rotala in a strong position.
Whether or not Rotala's time has finally come, who can tell? But if this article is accurate then it seems that the Bus Services Act 2017 has finally kicked in. Essentially, it appears that the duopoly that currently controls Manchester's bus routes is being challenged. So what does that mean for Rotala? This extract from its 2018 annual report gives an outline of the upside. “Currently the Manchester market is completely dominated by two major players. Any refranchising plan will seek to spread market share more equally among market participants, as in the London market. Thus, in a refranchised market, a group like Rotala might potentially achieve a market share which it could not possibly aspire to under current market conditions.”
The next update should prove interesting. They have had lots of time now to integrate the acquisitions and have in the past proved quite good at spotting new areas to expand in. My main fear is the rising cost of fuel and the governments total lack of will power to tackle the ever growing congestion by the use of buses. Some appear to be selling due to boredom.
Jeremy Corbin asked the PM a number of questions yesterday about bus services. About 20 years ago the councils were awarded grants to enable them to introduce rural services. Sadly my experience was that the scheme failed miserably because the staff who were employed were dinosaurs. I witnessed bus services being introduced without any market research. People could not be persuaded to use them even though the over 60's all got a free pass. Today most of the routes have been abandoned and replaced with community schemes run by in many cases volunteers. Now the government has brought in new regulations on drivers and operator licences and the volunteers are drying up at an alarming rate. As the rural population are getting older they will soon face a perfect storm. When the penny drops I am hoping Rotala will move up a rung or two as it seems a company able to grasp the future which in the bus industry is unusual.
At long last, I think that the company is managing to get its message across to investors. Having presented at both the Mello event at Derby and the ShareSoc meeting at Birmingham in recent months, the share price has moved northwards and is supported by relatively high volume.
Although the company stands to benefit from the Bus Services Act 2017 and the introduction of locally elected mayors, I am not entirely sure whether the market has got it. With established depots offering capacity, the company can make bolt-on acquisitions without raising its fixed costs. And it appears to be in a healthier financial situation than some of the big operators.
By the way, it might be worth mentioning that this is a company whose dividends have been rising for the last 7 years.
I am an investor in the company but it's not without risk. There is no guarantee that locally elected mayors will act on their powers over public transport. My golden rule is not to invest any more than I can comfortably afford to lose in any single company. And this is no exception.