National Express moves closer to pre-pandemic revenue levels

National Express reported a “sequential improvement” in performance in the third quarter on Thursday, with revenue up to 83% of the equivalent period ore-pandemic in 2019 on a constant currency basis, compared to 76% in in the second quarter.

The FTSE 250 passenger transport operator said it was mitigating rising input costs, explaining that with payroll and fuel accounting for 70% of its cost base, fuel was fully hedged through 2022 and into 2023, and wage settlements had been agreed across the business.

It said it was also mitigating the financial impact of ongoing driver shortages through cost control, and in North America, through the recent ‘Coronavirus Economic Relief for Transportation Services’ (CERTS) funding.

The board said it underlying profit before tax for 2021 was set to be in line with expectations.

It said it had “significant” liquidity and strong free cash flow, and was expecting to close 2021 with around £0.8bn in cash and undrawn committed facilities.

The group also noted that it had now signed its first bus "availability" agreement in the UK, enabling it to use zero emission vehicles without capital outlay.

“Due to the tremendous efforts of our colleagues across the group coupled with the support and cooperation of our customers across all of our markets, the trend of improving performance has continued through the third quarter,” said group chief executive officer Ignacio Garat.

“I am particularly grateful for the efforts of our colleagues in mitigating the industry-wide challenges of driver availability.

“This is particularly the case in our North American School Bus business and our team there has worked tirelessly to deliver results in line with our expectations despite this.”

Garat said the company’s ongoing focus on cost management and its “long-established” procurement and fuel hedging programmes meant it had seen no material impact from input cost inflation.

“We continue to focus on profitable growth with a strong pipeline of opportunities across the group and recent contract wins in Spain and the UK.

“We have completed our business review and I look forward to communicating the exciting path ahead for the group at our forthcoming capital markets day.”

At 0853 BST, shares in National Express Group were up 0.96% at 231.4p.