Travel company First Group has warned over its uncertain future, as the Avanti West Coast shareholders face a coronavirus-induced collapse in public transport use.
The bus and rail operator made the warning as it delivered its annual financial results, reporting a loss of over £150million in the 12 months up to March this year.
This warning comes as ridership falls on public transport, with rail ridership plummeting. First Group’s UK rail portfolio includes a stake in the InterCity West Coast operator Avanti, which runs the former Virgin Trains routes that serve Milton Keynes.
In making the statement, the company’s chief executive Matthew Gregory said, “There is no way of predicting with any certainty how the coronavirus pandemic will continue to affect the public transportation sector and the impact it may have on customer trends longer-term.”
Gregory had moved to say that the company’s long term fundamentals were sound. However, the company’s shares closed down by 20% at the end of trading on Wednesday, as part of a greater decline of two thirds since February.
The company saw a plunge in ridership of its UK rail and bus operations as people were discouraged from using public transport during the initial coronavirus lockdown. It also has struggled to find a buyer for its US bus operations.
First Group had begun to operate the Intercity West Coast franchise in December 2019 in collaboration with Italian state rail operator Trenitalia, taking over from Virgin Trains. The company is intended to run until 2031 and operate trains on HS2 when that launches later this decade.
First Group also runs the Great Western, South Western and Transpennine franchises. Its earning call reported the Great Western franchise had been in good health before the revenue drop, but concerns remain over the other two.
When the coronavirus crisis first emerged in March, the government took measures to suspend franchise agreements for UK rail operators for an initial six month period.
This means the government took on the financial risk of running all UK trains, and would also take the revenue made, with operators paid a management fee.