(Alliance News) - FirstGroup PLC and Stagecoach Group PLC on Thursday welcomed the UK Department for Transport's funding programme to restart normal public transport services.
The UK government is looking at a phased increase in transport services in England, after normal bus, tram and light rail networks across the UK were mostly paused in March as part of the effort to stop the spread of Covid-19.
As part of this, the UK Department for Transport has made GBP254 million available for buses and GBP29 million for trams and light rail to help increase the frequency and capacity of services.
FirstGroup said the DfT funding will allow the company to increase its bus service capacity as travel restrictions begin to ease. It added that at May 26, undrawn committed headroom and free cash was stable at GBP770 million.
For the first month of the year ending March 31, 2021, cash generated by operations in FirstGroup's Road divisions and for the group as a whole was positive and ahead of expectations at the start of the month.
Fellow transport operator Stagecoach also noted the government's funding programme, but warned that Covid-19 is set to leave a lasting effect on travel patterns.
Commercial sales at local regional bus operating companies are now at around 17% of prior year levels, Stagecoach said. Plans are in place to increase regional bus vehicle mileage close to pre-Covid levels in the near future. These are currently running at 40% of pre-virus levels.
Meanwhile, available liquidity has increased "significantly" due to positive cashflow and new borrowing capacity. Due to the strong liquidity position, Stagecoach has increased its planned 2020/21 capital expenditure by GBP14 million to include additional vehicles available for delivery in the short-term.
For its financial year recently-ended, on May 2, Stagecoach expects adjusted earnings per share between 12.5 pence and 14.0p. The year before, adjusted EPS from total operations came in at 22.1p.
"We see a lasting effect of the Covid-19 pandemic on travel patterns with an acceleration in trends of increased working from home, shopping from home, telemedicine and home education. We anticipate that it will be some time before demand for our public transport services returns to pre-Covid levels and we are planning for a number of scenarios," said Stagecoach Chief Executive Martin Griffiths.
Stagecoach estimates net debt between GBP350 million and GBP360 million at May 2. It currently has available liquidity of GBP814 million, including GBP300 million from the UK government's Covid-19 corporate financing scheme.
The FTSE 250-listed company said it is difficult to predict performance for financial 2021 due to the continuing uncertainty of the Covid-19 situation. However, the company expects to generate positive earnings before interest, tax, depreciation and amortisation in the short-term and avoid significant operating losses.
Shares in FirstGroup were up 6.9% at 60.70 pence each in London on Thursday morning. Stagecoach shares were up 6.0% at 70.94p.
By Tapan Panchal; tapanpanchal@alliancenews.com
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