FirstGroup is in big trouble. It is paying the price for overextending itself during the last decade. A borrowing binge has seen it become the biggest school bus operator in the US, while an aggressive bidding strategy has made it the UK's biggest rail operator.
Now, profits are falling in its UK bus and rail divisions, and a big dividend cut looms. The company's bid to win the West Coast rail franchise was an act of desperation to keep funding a dividend that it could not afford to pay. It arguably threatened the solvency of the business.
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