Go-Ahead eyes tough rail conditions

Bus and trains operator Go-Ahead said it remains confident of delivering full year result in line with company expectations but warned its rail business will be hit by tough economic conditions in the next financial year.

"Looking ahead to the next financial year, we expect the performance of our bus business to remain strong. In rail, we expect slower than assumed economic growth rates to impact performance and, as stated in April, £6m of rail bid costs are forecast next year," it said in a company statement.

Go-Ahead, which operates London Midland, Southern (including Gatwick Express), and Southeastern rail and franchises, said it continues to focus on its key strengths.

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However the "current economic environment does present challenges going forward as the bid model in 2009 assumed stronger underlying economic growth rates at this stage in the franchise," it said.

Southern is expected to deliver like-for-like revenue growth of around 8.5% and Southeastern 10% growth. London Midland revenues are expected to increase by 8%.

Like-for-like passenger revenue at its bus business is expected to rise by 4% for the financial year and it sees passenger growth of around 3%.

Chief executive of Go-Ahead David Brown said: "Go-Ahead continues to perform well, with all our companies seeing revenue growth in the year to date."

"In line with our strategy to grow our bus division, we have acquired a number of businesses during the year and have driven organic growth through smart-ticketing and providing high quality value for money services."

"In rail, we are pleased with the performance of our three franchises despite the challenging economic environment."

CJ