A rival bidder in the race to buy Govia Thameslink Railway operator Go-Ahead Group says it is still assessing its options.
Kelsian said it has until August 1 to make a firm offer for the Newcastle-based bus and rail giant, or walk away. It is considering whether to muscle in on Go-Ahead’s £650m agreement to be bought by Australian bus operator Kinetic and Globalvia.
“Kelsian continues to carefully assess all its options in relation to the opportunity and accordingly continues to urge Go-Ahead shareholders to take no action at this time,” the business said.
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The update in the potential takeover comes as the North East group gears up to deliver a good full year performance, as passenger numbers steadily moving to pre-pandemic levels.
In a trading update for the year ended July 2 2022 – the Newcastle rail and bus company, which now employs 27,000 people in the UK, Singapore, Ireland, Sweden, Norway and Germany – said
volumes across its regional bus business are at more than 85% of pre-pandemic levels, and that it is gearing up for a busy summer period.
Rising numbers in some areas have given the group confidence in the continuation of passenger recovery in the coming months, and the board expects operating profit before exceptional items to be ahead of 2020 levels.
It said its London and International Bus division will benefit from performance that is ahead of plan in London and Singapore, including better than anticipated Quality Incentive Contract (QICs) payments in London. Meanwhile, in Sweden, Flexbuss, which it acquired in April 2022, is trading positively and in line with expectations.
Go Ahead expects the division to deliver operating profit before exceptional items at least in line with pre-pandemic underlying profitability levels, which stood at £51.2m.
Within UK Rail, it expects to see operating profit before exceptional items of £25m to £30m, buoyed by the start of GTR’s new national rail contract on April 1.
In Germany, it said it continues to progress improvement plans in Baden-Württemberg, although financial penalties relating to operational performance have been slightly higher than anticipated in the period. Following discussions with clients in Baden-Württemberg, its has reached a memorandum of understanding which will result in a modest improvement to the financial performance of the contract over its life. Further negotiations remain under way.
The first of two contracts in Bavaria also started at the end of last year and the second will start this December.
In Norway, a new agreement was reached last month between the Norwegian Railway Directorate and Go-Ahead Norway A/S, regarding the structure of its rail contract. Under the original contract, which began in December 2019, the revenue risk associated with changes in passenger demand rested with Go-Ahead. During the Covid-19 pandemic, the Norwegian Government provided financial support to rail operators, preventing material losses.
The contract provides a revenue support scheme until the end of the contract and as a result of improved contractual arrangements, the group expects to significantly reduce the £66.2m onerous contract provision relating to its rail operation in Norway.
Overall, the board expects international rail to deliver an operating loss before exceptional items of £15m to £20m.
Christian Schreyer, group chief executive, said: “Passenger numbers on public transport have continued to recover from the pandemic and in certain parts of the UK, such as Manchester, our buses are as busy as they were before Covid-19. We are encouraged to see so many people using buses and trains and we expect a busy summer ahead, particularly in tourist areas.”
Shares closed at 1536p, down 2.17%.
