Go-Ahead reaffirms FY guidance, says GTR has stabilised

Transport operator Go-Ahead Group reiterated its expectations for the full year on Thursday as it said service levels on the Govia Thameslink Railway, which it runs, have stabilised following recent industrial action.

In a trading update for the period from 3 July 2016 to 1 April 2017, the company said passenger revenue in GTR fell 5%, but Southeastern revenue was up about 3%, while revenue in London Midland rose around 6%.

"Discussions between GTR and the ASLEF and RMT unions continue with the aim of resolving the ongoing industrial disputes. GTR remains fully committed to resolving these issues so as to provide improved service for customers and reduce uncertainty for its stakeholders," the group said.

Discussions are ongoing with the Department for Transport regarding a number of contractual variations, the company said, adding that management's judgement around these discussions and the potential impact on rail profitability for the full year remains consistent with the guidance outlined at the half year results.

Revenue in the regional bus division was up around 1.5% in the period, while revenue in the London bus business was up 2.5%.

Go-Ahead said it has begun the process of refinancing its £200m sterling bond ahead of its maturity in September and as a result, it expects finance costs to reduce in the financial year to June 2018.

Canaccord Genuity said the update was "solid".

"It is encouraging to note the stabilisation in GTR’s service levels. With passenger bus volumes under pressure and two rail franchises due to expire soon, medium-term growth will most likely come from contract wins," it said.

At 0908 BST, the shares were up 5.9% to 1,831p.