Bus and rail operators were rare gainers on Monday as they move to conserve cash and revealed Government-backed revenues protections.

Shares in Southeastern and Thameslink operator Go-Ahead (GOG) soared over 13% to 737p as it said in an update that it took swift action to mitigate the impact of dwindling passenger numbers in its non-contracted markets.


Around 75% of the company’s revenue comes from already agreed contracts and so is protected from changes in underlying travel demand.

For the quarter of its income that isn’t protected – the Southeastern franchise, as well as it regional bus operations and rail division in Norway – Go-Ahead has been significantly reducing services as it lowers its cost base where possible.

It has suspended its 30.17p per share interim dividend, saving £13m, but insisted it understands ‘the importance of the dividend to our shareholders’ and will keep the dividend policy under review in the coming months.

Go-Ahead also flagged that it has £110.6m of unrestricted cash and £134.3m of unused credit facilities, and no debt maturing until at least 2024.

Go-Ahead CEO David Brown said the firm's focus during the outbreak is ‘to support the UK’s efforts in tackling the crisis by providing unutilised buses to transport NHS workers, supporting supermarkets with food deliveries and delivering essential goods to cut off and self-isolating communities.’


While shares in embattled South Western operator FirstGroup (FGP) jumped 4% to 39.8p as it revealed it was also protected by contractual structures in place in several of its businesses.

The firm has also reduced services to fit demand and put all future capital expenditure on hold, and has over £650m in untapped liquidity if needed.

Its net debt to EBITDA ratio also stands at 1.5 times, well below the 3.75 times or lower ratio required by its banking covenants.


Stagecoach (SGC) however couldn’t make it a hat-trick of FTSE 250 bus and rail gainers, as its shares dropped almost 4% to 59p despite pointing to £290m of cash and undrawn facilities in a trading update.

The company said it also has contractual protections in place, and expects to retain a ‘significant proportion of our revenue during the downturn’.

For example its London bus business is paid by Transport for London to operate specific bus services, and so the revenue from that division isn’t affected by a short-term decline in passenger numbers.

But Stagecoach’s regional bus division, which made up £535m of its £800m total revenue in its half year results for its current financial year, isn’t so protected.

Around 63% of its revenue in this division is commercial, and so comes from customers directly purchasing tickets for travel. The company’s recent daily data suggests commercial patronage is down around 40% as a result of the current situation.

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Issue Date: 23 Mar 2020