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…too cheaply

It’s reassuring to see Cosmens still buying. Concern is that they have a way to make a bid and it goes to cheaply.

Firepower - where are you based and what’s you angle. You’re not here just for laughs - far too persistent. You’re clearly not uk based or English speaking based. Spain by any chance ?

It shows how much the price reacts to any good news. It’s been missing for a long time. Let’s hope for a few months of more…..

Rob - selling Alsa was one of the scenarios discussed by VVB. Selling at a premium, paying off debt and returning some cash. It’s just not going to happen though.

Of particular interest is:

“ The fact that EVUs are nevertheless held liable for lost services, although they have no influence on network availability, is no longer systemically tenable. The competitor's report states that the current transport contracts no longer represent these changed conditions. They come from a time with completely different burdens and conditions.”

German management getting very vocal about the network issues over there. They are upping the pressure to get and putting forward their case:

https://nationalexpress.de/de/aktuelles-24/presse/details/9-wettbewerberreport-eisenbahnen

As we know - Cash is King. Cash is the only way to service the debt whether its the Hybrid or Bonds. Where is this going to come from?

A positive German resolution isnt going to release much cash. It may release onerous contract provisions to the bottom line but not a tonne of cash. It will help with year end paper losses and reduce them, if it is done in time or it could flatter 2026 results if done after year end.

UK is not going to yield much. Coach now going to ALSA. Leaves just the bus opportunities. Makes me wonder if Mobico intends to try and win some franchise contracts so it has something to sell of value. there may be some cash coming on sale of assets to the authorities (depots, vehicles etc...) but based on US school bus outcome there may be very little to turn to cash when its all washed through.

I disagree with the analysis that WeDriveU has little value. I assume that this is the obvious asset to sell and to exit the US completely. An unnecessary distraction for Spain. I appreciate that what was paid, for the business, may not be fully recoverable in todays climate, but Mobico has also added business units to WeDriveU in excess of what they paid cash. Improvements to systems and investment have also been added. If the unit is valued today on the same matrix then that could return $200m-$300m.

The only other opportunity is to dramatically cut costs. This is what the management are seemingly going to focus on. Previous management found £50m p.a. Can the new management find another £50m? If they can then they may have a way out.

Selling ALSA at full value isn't going to happen imo. Cosmens want it and I doubt they will pay that kind of figure (£2.2m or thereabouts). They hold the cards for now.

Looking at previous events a 5-10 year turn around is most likely now, if its possible.

firepower - you really are a first class *****

Thanks Gypo. Interesting and bleak read!

Perhaps they can use the cash to buy back 500m for 250m

The fact that ‘ the market’ knew the auditors were going to resign months ago would not suggest that ‘the market’ has decided today that it doesn’t like the news. What it does suggest is PI’s panicking over what to them is new news.

Its a fairly reliable indicator to buy when FirePower starts the flurry of pointless and useless posts that all is doom and gloom, that the bottom is in, for now. It is what he is no doubt employed to do.

I also agree re coach. Good move. Separate the political and largely uncontrollable element of the business ie Bus. If franchising goes well, then great.l and can maybe sell it. If not it’s easier to get rid. Theres also a potential cash gain from franchising as the assets will be needed by the regional authorities, whoever wins the franchise. How much will that bring in?

GoodBloke - re: German Resolution: there’s around £130m from memory remaining unused in the provision. If the agreement gets back to, at worst, neutral then this could be released. Non cash but straight to the bottom line. There will also likely be some clawback of costs relating to disruption and utilities from the losses over the last 3 years, last 2 in particular. This will be much less. If I were the management I wouldn’t want to take it in 2025 as it will be less impacting as it will only reduce the paper losses already stated and won’t be as visible. I would wait until January and start the year with a sizeable bottom line profit and make the year look much better and on the round to recovery.

They can pay the Bonds or the Hybrid. If they pay the Bonds then although interest will be higher in the Hybrid it provides much more flexibility for a £20m p.a. premium. With the bonds paid there will be a saving of around the same, so neutral in todays costs until the Hybrid can be re-financed or paid with an asset sale.

A re-finance of Hybrid or at least some it could be achieved once £500m Bonds cleared over next couple of years then debt on the books would be in the target range 1.5%. A game changer.

If WeDriveU is sold at a sensible or Book Price then also a game changer.

Watch Out for - Write down of Goodwill (no cash cost) in UK and WeDriveU. This is explicitly stated as likely/high risk. When it was stated the same for ALSA it did happen and created another large statutory loss. UK around £50m and WeDriveU £100m ish.

Add that to the £250m from NASB (-£100m FX gain) = £150m, then we are looking at another bottom line loss of c. £300m.

We can only look at 2026 and forward 3 years and hope that management get it right. If they do, and I have more hope with the old school management approach now in place than the Harvard business gurus of Revolve, then the opportunity is still big enough to wait for. This is not a fast return to the days of pre-covid.

I caveat this with I havent seen the presentation, just the report:

In my view its clear where this is going and where it should have been 3 years ago.

No new CEO - they don’t need one. They have one, Paco. Operations moving under ALSA control and there will be one company left. ALSA.

Im in little doubt that WeDriveU is going to be sold. It just doesn’t fit, they need the cash within a couple of years (see below) and is an operational and logistical headache for Spain. They don’t understand it as well as Europe, that is clear to see. The problem is the uncertainty on what it will be sold for given the woefully bad achievement of NASB and the warning of Goodwill write down of future cashflows in WeDriveU (that is not going to help achieve a great price - see below)

Results fairly neutral but negative Market Reaction understandable.

The market reacted clearly to the concerns in the update that ALSA may not keep producing stellar profit growth year after year in order to pay debt organically. 13% revenue growth 0% profit growth. This may well be temporary due to timings of income etc… however it is a reminder and spooks investors. In a way its quite understandable given where we now are and what has happened over the last 4 years.

WeDriveU is less of an issue IMO as clearly and confidently stated that the result was temporary contract issues and has now been rectified.

Germany - looking like good progress. No further Onerous Provisions. New drivers coming online. Talks genuinely progressing and with terms that should at least halt any further slide and hopefully will allow a write back to the bottom line. It would appear that some concern has been lifted about further large costs.

Some of the headline numbers are not well explained, such as static profit growth in ALSA. Investors fill the gap with doubt.

CashFlow - still strong but lower due to NASB Growth Capex and a timing issue in ALSA receipts. Expect to return to run rate.

ROCE - up to 11%. Only because asset values destroyed by poor sale of NASB. Otherwise wouldn’t have increased.

New Projects - 42% ROCE is obviously great. New wins are around 5% revenue growth on continuing operations.

Cash - with NASB sale proceeds around £375m. If the earn out comes through then another £50m. Im estimating £20m from German Onerous Contract Provision write backs (cash not reduction in the provision which Im guessing could be quite a bit higher). Around £90m FCF.

Hybrid - enough Cash next year to pay the Hybrid off (see Cash) without using Revolving Credit. But leaves Bonds and Bank loans to deal with in 27 and 28.

Debt (without leases) is £1bn. Around the going rate for National Express/Mobico. Plus the £500m Hybrid. The increase in debt is largely due to ‘cash flow’ as above.................

What’s interesting beyond the fact that the new driver cohort are entering service is the language used to explain or partly explain the staff shortages being the construction works, with detours required being demanding on staff and therefore costs. Let’s hope the PTA agrees.

Full Transcript:

Cologne, August 21, 2025

National Express will run more frequently again starting September 6.

Starting from September 6, 2025, National Express will operate more frequently on several lines in North Rhine-Westphalia again. For commuters and travelers, this means more trips and longer operating hours, especially in the evenings and on weekends.

The improvement of the schedule offerings is an important step toward greater reliability in the daily lives of our passengers. Our extensive investments in personnel, training, and further education are showing results.

explains Michael Hetzer, CEO of National Express Rail GmbH.

The past few months have been particularly challenging for rail traffic in North Rhine-Westphalia: The number of construction sites on National Express routes has nearly doubled since 2023. Detours, closures, and last-minute changes in the schedule not only burden operations but also personnel. At the same time, there continues to be a shortage of trained train drivers in the entire industry. To ensure reliable mobility for the people in the region under these conditions, National Express temporarily adjusted the timetable on some lines. The goal was to keep the existing operations as stable as possible and to avoid short-term train cancelations.

The company also intensively recruited employes over the past year and a half, provided more training, and trained staff for additional routes—especially for detours, which are necessary during construction work. Many of these newly recruited train drivers are now ready for duty and are noticeably supporting daily operations. "Now we can increase the service on many lines again and thus gradually return to the regular schedule," said Hetzer.

Hetzer remains cautious but optimistic: "The high number of construction sites on our train lines will continue to demand a lot of patience and nerves from us and our passengers." But we are working diligently to get the system back on track for our passengers.

The most important schedule adjustments from September 6th at a glance:

RE 4: Runs continuously to Aachen Hbf again on weekends and public holidays. Between Aachen Hbf and Düsseldorf Hbf, the additional services during peak hours will continue to be canceled from Monday to Friday. The same applies to the nite services between Hagen Hbf and Düsseldorf Hbf on the nites from Friday to Saturday and from Saturday to Sunday.

RE 6 (RRX): Operates again according to the regular schedule after 9 PM. Between Essen and Dortmund, however, there will be partial cancelations due to major construction work until October 31, 2025.

RE 7: The operating hours are extended until around 10 PM. The concept for the replacement bus service is currently in detailed planning.

RE 11 (RRX): The line operates as scheduled between Hamm (Westf) Hbf and Kassel-Wilhelmshöhe. The section between Hamm (Westf) Hbf and Düsseldorf Hbf, on the other hand, is only very limitedly s

Not sure if this has been posted and I missed it. On the Mobico German Rail Website News:

"The company also intensively recruited employees over the past year and a half, provided more training, and trained staff for additional routes—especially for detours, which are necessary during construction work. Many of these newly recruited train drivers are now ready for duty and are noticeably supporting daily operations. "Now we can increase the service on many lines again and thus gradually return to the regular schedule," said Hetzer."