FirstGroup eyes long-term deal for Avanti after focus on improved schedules
FirstGroup is struggling to provide a long-term government contract for its renowned subsidiary Avanti, with the group focusing on ensuring ‘acceptable’ levels of service for passengers.
“During the second half of the year, we will be fully focused on operational improvements and delivering acceptable passenger service levels,” chief executive Graham Sutherland told analysts this morning.
Avanti has made headlines as it was forced to cut services – including trains between London and Manchester – after a drop in the number of drivers volunteering to work on rest days led to cancellations and delays at the summer course.
Since August the rail operator, which has stopped relying on rest day work, has introduced 14 additional daily services – 10 to Manchester and four to Birmingham.
But the aim is to increase trains from the current 180 trains a day to 264 in December.
“We expect material progress as we launch the new schedules in December,” the chief executive added.
Despite his problems, Avanti was last month granted a six-month contract extension by the Department for Transport (DfT) “to assess whether [Avanti] is capable of executing this crucial route to a standard that passengers deserve and expect.
Sutherland said FirstGroup was working to clear its training backlog as the group now has more train drivers compared to pre-pandemic levels.
“We are confident that services will return to the right level for our passengers,” the chief executive said.
“If we achieve this, we are also confident that we can sign a national rail contract for Avanti.”
City AM has contacted the DfT for comment.
Sutherland’s remarks came on the same day FirstGroup kept its full-year targets unchanged after reporting its half-year results.
In the six months ended September 24, the group recorded a 21.6% increase in its adjusted operating profit thanks to the increase in the number of passengers on board its Lumo and Hull Trains services as well as to lower central costs.
FirstGroup’s adjusted attributable profit also reached £30.8 million, compared to £13.3 million last year, while adjusted net cash was £7.3 million.
Deemed “resilient” amid the current political, industry and economic headwinds, the financial performance led FirstGroup to declare an interim dividend of 0.9 pence per share.
“Now there is potential for additional distribution of values from the North American release,” Sutherland said.
FirstGroup sold its Greyhound properties in September for £122million, with the sale due to be completed in December.