FirstGroup sees strong growth in UK Rail

FTSE 250 transport firm FirstGroup said that trading in the first half has been in line with its expectations with strong growth being seen in the company's UK Rail division.

UK Rail like-for-like (LFL) passenger revenues are expected to rise by 8.1% in the six months to September 30th. On August 15th, the Department for Transport (DfT) awarded FirstGroup the InterCity West Coast franchise contract, which resulted in current operator Virgin Rail launching a legal challenge against the government.

"We have every confidence in the DfT's process which is rigorous, detailed and fair and in which bids are thoroughly tested. Our focus is to ensure a smooth transition with continuity for staff and passengers alike and to deliver the many benefits and improvements we are offering without delay or disruption," the company said.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Meanwhile, UK Bus LFL passenger sales rose 2.5%, though challenging economic conditions continue to have an impact on a number of its urban operations. However, the group said that the North of England and Scotland saw improved growth.

"I am pleased to report overall trading for the first half of the year is in line with our expectations," said Chief Executive Tim O'Toole.

"With a fundamentally strong and diverse portfolio of operations we are focused on driving a greater performance and delivering improved growth and returns. While there is significant work to do we are satisfied with the progress of the actions we have taken, though we remain mindful of the uncertain economic backdrop," he said.

In First Student, the group's school bus services division in the States, US dollar LFL sales are expected to be down by 3.8% though the group assured that the business is set on the path to recovery.

US dollar LFL revenues at the North American bus transport unit, First Transit, are expected to increase by 3.2%. Meanwhile, intercity bus division Greyhound has seen 1.7% growth which the group says reflects the impact of the sluggish economic environment and lower fuel prices.