(Alliance News) - Stagecoach Group PLC, FirstGroup PLC and Go-Ahead Group PLC on Friday all welcomed the news that the UK government would provide financial support for the bus sector amid the plunge in demand during the Covid-19 outbreak.
Bus companies in England will receive almost GBP170 million in new government funding to ensure services continue to operate during the coronavirus pandemic.
UK Transport Secretary Grant Shapps said on Friday the investment will protect crucial local transport links across England for those unable to work from home.
Bus operators will be required to maintain up to 50% of normal service levels and allow adequate social distancing space between passengers on board under the conditions of the new GBP167 million funding pot.
The package, which has been agreed with bus operators, will be paid over a 12-week period under the new Covid-19 Bus Services Support Grant.
Stagecoach said it was pleased with the government response.
The company noted that Transport for London has indicated that contracted revenue amounts will continue to be paid to London bus operators, with any variable cost saving returned to TfL.
For the rest of England, the Department for Transport will make available up to GBP14 million per week, starting from mid-March.
The financial support does not cover inter-city coach operations, including Stagecoach's megabus.com brand, so Stagecoach said it will suspend this service for England and Wales from April 5.
Governments in both Wales and Scotland will continue to maintain payments concessionary revenue and the Bus Services Support Grant to operators at the level forecast before the virus outbreak.
Operationally, since March 23, Stagecoach said commercial sales from its regional bus operating businesses were at 15% of normal levels, with vehicle mileage at these companies at 50%
The group's regional bus business is looking to furlough around 55% of its bus drivers and engineering staff.
Stagecoach has reduced fuel hedging, as well as its planned capital expenditure for the 2021 financial year to GBP40 million in cash and GBP20 million in new leases, from GBP105 million cash and GBP38 million in new leases.
Go-Ahead welcomed the announcement, describing the financial support as "crucial" in ensuring that bus services can continue to run.
In line with other measures implemented to ensure the business can continue running, Go-Ahead's board and executive director have taken a 20% reduction in fees and base salaries during the period.
Finally, FirstGroup said the support would allow its First Bus operation to continue operating during the crisis, which has caused fare-paying revenue and concessionary volumes to decline by 90%.
"I am pleased that by working with the DfT, devolved government and local authorities, we are demonstrating that we are able to secure the necessary support to continue running bus services, recognising the unique and essential role they play in sustaining our local economies and communities," said FirstGroup Chief Executive Matthew Gregory.
Shares in FirstGroup were up 5.3% at 50.00 pence on Friday in London. Stagecoach shares were 2.3% higher at 67.85p and Go-Ahead up 6.2% to 865.32p. Peer National Express Group PLC, which didn't issue a statement early Friday, was up 3.3% at 183.80p.
By Dayo Laniyan; dayolaniyan@alliancenews.com
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