FirstGroup announces plans to sell Greyhound

FirstGroup has announced plans to sell its US-based Greyhound coach service.

The group blamed competition from low cost airlines for the poor financial performance of Greyhound, which it has owned since 2007.

Greyhound carries around 17 million passengers a year and is North America’s only operator of scheduled intercity coaches.

In a statement, FirstGroup said: “Greyhound has limited synergies with our other, predominantly contract-based, North American businesses and we believe that value for shareholders can best be delivered by seeking new owners.”

The group’s main contracting businesses in North America are the First Student school bus division and First Transit, which account for nearly two-thirds of annual earnings.

FirstGroup said it also wants to let go of First Bus, as it has “limited synergies” with its other operations.

Boss Matthew Gregory confirmed that a sale of the bus operation in “whole or in part” is being considered.

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Mr Gregory said: “We see significant potential to generate long-term, sustainable value and growth from the solid platforms these businesses provide in the North American mobility services sector.

“We are intent on executing this strategy at pace, having full regard to the regulatory and stakeholder procedures and approvals that will be required.”

Shareholders had been pushing for the group to be broken up and shares rose more than 6% on news of the plans.

The group also operates the South Western Railway (SWR) and Great Western Railway franchises in the UK and said it would continue this.

But it warned: “Any future commitments to UK rail will need to have an appropriate balance of potential risks and rewards for our shareholders.”

The news came as FirstGroup posted a pre-tax loss for the year to the end of March that was smaller than the £326.9m loss it reported at the same time last year.

The First Student business increased earnings but Greyhound saw its profits go down. In the UK, the First Rail division saw earnings rise from £57.8m to £72.3m and its bus business recorded earnings of £65.8m, up from £50.2m.

But the firm booked a £102.1m write-down on SWR due to “high levels of uncertainty around the franchise”.

Source: SKY NEWS

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