Go-Ahead maintains outlook despite Southern Rail strikes

FTSE 250 transport operator Go-Ahead said its expectations for the full year remain unchanged, as it reported “robust” trading in the first quarter despite a series of Southern Rail strikes.

In the period from 3 July to the end of October, group revenue in the bus division grew around 2%, while passenger journeys were up around 0.5%, with economic weakness in the north east continuing to affects its operations in the region, suppressing overall growth rates.

Excluding the north east, revenue growth was approximately 3% and passenger growth 1.5%.

In London, the rate of growth in revenue and mileage slowed, in line with the company’s expectations. Revenue grew around 4% and mileage 0.5%.

Go-Ahead, which hedges its bus fuel costs in sterling, reiterated that its fuel requirements are fully hedged to the end of 2018.

In the rail unit, - which operates the Govia Thames Link Railway, Southeastern and London Midland franchises through its 65% owned subsidiary Govia - London Midland and Southeastern traded well and both continue to make profit share payments to the Department for Transport.

However, Go-Ahead said GTR’s passenger revenue and journeys were hit by strike action in the period.

“As previously reported, the additional resources being invested in GTR to support service delivery continue to impact margins in the short term. Our margin expectations for the life of the franchise remain unchanged.”

Passenger revenue and journeys at Southeastern grew around 3.5% and 1%, respectively. At London Midland, they were up approximately 8% and 7% and GTR saw declines of 3% and 0.5%, respectively.

Go-Ahead said it remains in a good financial position, with strong cash generation and a robust balance sheet.