Train operator Go-Ahead (GOG) says strikes in its Southern rail franchise will cause full year earnings to be lower than expected.
Southern Trains is run by Go-Ahead’s 65%-owned Govia Thameslink Railway (GTR) venture, alongside 35% partner Keolis.
Industrial action has severely disrupted services over the past few weeks.
Go-Ahead also says costs associated with increased bidding activity for various contracts in the German rail market will also hit its full year results.
Investec has cut its 2017 underlying operating profit forecast by 2.5% to reflect additional rail costs. It also incorporates slightly slower growth in the company’s bus businesses which will impact revenue from next year.
GTR services continue to be heavily affected by industrial action and GTR says discussions with the Department of Transport (DfT) regarding contractual claims to the strikes are ongoing.
Rail unions, including The National Union or Rail, Maritime and Transport Works (RMT) and ASLEF, have been striking throughout the year due to safety concerns if guards are removed from trains.
GTR expects a 2% decline in passenger journeys and a 4% fall in revenue over the next six months, in stark contrast to expected growth for Southeastern and London Midland.
The firm has recently submitted a bid for the new West Midland franchise next year, while the DfT has indicated it will extend the term of the Southeastern franchise by 24 weeks to December 2018.
In its regional bus division, Go-Ahead has delivered higher passenger revenue and journeys, but warns that weakness in the north east is suppressing overall growth rates in this division. Revenue is expected to grow by 1% in six months.
