Shares in FTSE 250 public transport operators FirstGroup (FGP) and Go-Ahead (GOG) gained ground after the government extended a bailout for local bus services.

The new funding round of £218.4 million for the industry under the COVID-19 Bus Service Support Grant Restart (CBSSG Restart) programme extends a deal previously announced at the end of May for the next eight weeks.

After that, weekly funding of up to £27.3 million will be available from the Department for Transport until such a time when funding is no longer required.

FirstGroup shares rose around 6% to 41.1p on the news, while Go-Ahead shares increased 2.6% to 607.5p. Shares in fellow operator Stagecoach (SGC) also jumped, rising 6.4% to 49.1p.

It comes as the Government also announced plan to publish a National Bus Strategy, setting out how it plans to support a ‘sustainable future’ for bus services across the country, and working on ways for the bus sector to operate independently and be commercially viable.


Go-Ahead CEO David Brown welcomed the funding extension as he warned passenger numbers across the firm’s network are still 50% below pre-coronavirus levels.

FirstGroup’s bus operations across England have increased operated mileage from 40% to almost 90% of pre-pandemic levels, with passenger volumes increasing from around 10% to 40% since the low point.

In a note on FirstGroup a few weeks ago, Canaccord Genuity analyst Gert Zonneveld warned that while government support will help cushion the blow, he expects revenue and margins in its UK bus division – which makes up around 11% of the group’s total revenue – to take a hit in its 2021 financial year before staging a ‘good recovery’ in subsequent years, depending on social distancing guidelines.

Though it may take ‘several years’ for the firm’s passenger numbers to return to pre-pandemic volumes, he added.

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Issue Date: 10 Aug 2020