Investors are losing confidence in bus and train operator Go-Ahead (GOG) as it downgrades margin guidance for its Govia Thameslink Railway (GTR) franchise by nearly 50%.

The company does not expect margins to recover from profit shortfalls in the short-term, and blamed industrial and operational related challenges for the drop.

Its shares are down 15.7% to £20.50.

Elsewhere the transport operator expects full-year revenue growth of 2.1% and a decline in passenger journeys by 0.2% on buses, which it blamed on economic weakness in the north east.

The number of local bus passenger journeys is decreasing, according to For the year ending March, 4.5 billion journeys were made, signalling a 2.5% decline.

In London specifically, the number of journeys fell by 3%.

Go-Ahead still expects bus revenue to grow and expects to hit £100 million in profit on an adjusted basis, which could be attributed to stronger pricing in the city, compared to other areas.

However, the company is concerned over the proposed Bus Services Bill as it could hand more power to local councils by allowing them to introduce their own franchising schemes.

Investec says medium term forecasts have been reduced by 11%-12% as a result of the revised outlook for GTR.

Great Western Railway operator FirstGroup (FGP) is travelling in the opposite direction, up 5.6% to 108.9p as it reports higher pre-tax profit, which is impressive in light of the First Capital Connect and First ScotRail franchises coming to an end.

FirstGroup is also responsible for TransPennine Express, First Hull Trains, the Heathrow Connect service and Tramlink on behalf of Transport for London.

The company’s bus division operates a fifth of the UK’s local bus service and is one of the largest bus operators in the UK.

JP Morgan says FirstGroup’s results are slightly ahead of their estimates, by 5% at the pre-tax profit and 9% at earnings per share level.

Issue Date: 14 Jun 2016