First Group: General Discussion

317 forever said:

I have seen this pic with some StreetDecks in First corporate livery. These contrast with those recently delivered to First Leeds in a local 2-tone green with red relief livery.
https://www.flickr.com/photos/81709772@N07/39779584825/

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TheGrandWazoo said:

Ta dah!

• Euro 1 (1993)
• Euro 2 (1996)
• Euro 3 (2000)
• Euro 4 (2005)
• Euro 5 (2009)
• Euro 6 (2014)

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Dentonian said:

There is/was presumably some lag between these dates and the buses actually hitting the streets. Stagecoach Manchester's last Euro 3 Enviro 400s were delivered in March 2007, with he first Euro 4s arriving that August. This is why the older E400s (2006 build) were not transferred to the MagicBus fleet in advance of LEZ type plans along Oxford Road (and other corridors).

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baza585 said:

Yes there is. There are some 2017 registered Euro 5 ADL E200s for example sold to Indies.

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cactustwirly said:

Leicester has a good fleet, with the exception of the 02 plate Eclipses which are a bit long in the tooth.
& the 05 Eclipses could do with a refurbishment.

It's not all about age, it's all about the quality of the vehicle, and First buses are much better specced than Stagecoach & Arriva buses.
Although Stagecoach probably has the newest fleet (they still have some old clapped out darts around Peterborough) they are very cheap and poorly specced.

Ie a 5 year old Mercedes or BMW is better than a brand new Fiat IMO.

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overthewater said:

What happened to the policy of refurbishing buses? or is there no money for that either now?

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Volvodart said:

Nothing much. The refinancing can only happen when the bonds are due for renewal, so the writer is wrong if he thinks more can be done. Do you not think First would have done more if it were possible, but it would cost too much to pay off the old debt. Nothing has been heard of the activist since July. I do not call that recent.

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Surreyman said:

Recent (negative) comments in Financial Press about First Groups Fortunes, most of this we have heard before, interesting comments about UK Rail Growth targets.

(ShareCast News) - In his Inside the City column for the Sunday Times, John Collingridge was focussed on passenger transport operator FirstGroup, noting that the question of debt remained a feature in almost any conversation about the firm.

The company had asked shareholders for £615m in a heavily-discounted rights issue in 2013, in a bid to fix up its balance sheet which had been straining under nearly £2bn in debt since a US acquisition in 2007.

Now, almost five years later, debt was still a burden at £1.2bn, and as Collingridge pointed out,First has not paid a dividend since the issu
And the net debt figure was not telling the whole truth either - when accounting for £384m of untouchable season ticket deposits, the number was closer to £1.6bn.

Collingridge said it appeared as though Tim O'Toole - chief executive since 2010 - was running on the spot as he tried to tackle the "debt mountain".

Gradual refinancing at cheaper rates would be helpful, with the company slashing £14m from its interest bill, but the board had only recently gotten started with such action.

It was also struggling with some of its operations, with the board noting last month that more passengers in the US were opting for budget airlines over its Greyhound coach division, sending the unit's revenue down 3%.

First's shares have been hanging out below the 85p mark for a total value of £1bn, and recently attracted the attention of Canadian activist fund West Face Capital, which wanted to use its 5% holding to force a break-up.

Looking closer to its headquarters, Collingridge said First's UK rail operations might look like a bright spot at first glance, with revenues improving 3.2% in the period between September and January.

Indeed, the lucrative Great Western franchise was still in First hands, with the government suggesting last year that the company could see its tenure on the routes extended to 2024 without any competitive bids.

On the TransPennine, First was due to pay the government £303m in premiums annually and had expected revenues to grow at 12% per year when it won the current tenure in 2016.

The board had set aside £190m to cover the risk of failing to deliver those premium payments.

And on the South Western franchise, in which it holds a 70% stake in association with Hong Kong's MTR Corporation, there was the promise of £2.6bn in premiums based on growth of about 7% per year.

First had around £60m of risk capital at stake for that operation, Collingridge said.

However, neither the TransPennine or South Western were growing as fast as anticipated, with TransPennine at around 9% and South Western lagging behind at 3%.

A fleet of new trains currently being built would help, but Collingridge pointed to the recent failure and bailout of Virgin Trains East Coast as providing a valuable lesson - if a franchise misses its compound growth targets, it can be hard to catch up.

"Should they fail, that's £250m at risk. In that event, I can't see shareholders supporting another rescue rights issue. Sell."

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Volvodart said:

That is just a quote from the article already mentioned above.

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A very big opportunity

The clean air agenda demands big investment from operators, and an opportunity for local authorities to make genuine positive changes, argues First Bus MD Giles Fearnley

How you look at the bus industry, and how it is perceived, depends on your point of view. Politicians, passengers and peers have pre-formed perceptions of what a company is, what it stands for and where it should be going.

Nudging 6,000 vehicles in its fleet First Bus has all this baggage, but under the dynamic leadership of MD Giles Fearnley for the last seven years, that has been changed, and change continues.

As we meet at The Point, the new London HQ for FirstGroup which has leased a floor in this building in the redevelopment area overlooking Paddington Basin and the main line terminus, Giles remains as passionate as ever about UK Bus.

Yes, the business has been turned around; the hard work has been done. Yes, there have been some unexpected twists, such as the impact of currency on fuel prices after the Brexit vote. And yes, the air quality agenda is opening new opportunities in terms of setting new relationships between operators and local authorities.

Investment

It’s the big subject on everyone’s lips. Numbers for the groups have yet to be released but our understanding is that, generally, UK new bus orders will be down by around one-third, compared with bumper pre-PSVAR deadline orders.

First too has yet to announce its investment, but promises that where appropriate, the money will continue to flow.

“First can’t be clearer: We will invest, and invest significantly, where local partners are willing to do their bit,” says Giles.

This means proper partnerships and meaningful talks, he says, strengthening comments he made at the UK Bus Summit.

“Bus is on the way back, mark my words – I’ve never been more confident of that.”

He adds that many of the markets First serves are growing year-on-year, citing Cornwall, York, Leicester, Norwich, Southampton, Bath and the Bristol, the latter having seen four years of continuous growth.

There’s also been a revolution in ticketing and information with m-tickets, contactless, smart, and “fabulous apps,” he says.

“Two years ago, who’d have believed that fleets in virtually all urban markets would be contactless by the end of 2018?

“But we have this now and our customers love it. Our early-adopter markets are heading for 50% cashless. Within nine months almost 30% of our customers in Aberdeen are paying by contactless.

“Add those using mobile and over 50% of passengers are no longer paying cash. And, who’d have believed that First Bus would roll out a multi-operator app, but that’s what our customers want.”
‘Wobblers’ on ticket machines in Bristol are helping to promote contactless payments

He argues that pan-industry, busways in Gosport, Manchester, Crawley, Cambridge, and Luton/Dunstable demonstrate the power of investing in dedicated bus priority. “They are a great success with passengers, exceeding pre-opening passenger forecasts.

“The Manchester Vantage service, which we are proud to operate, started in April 2016 and is now carrying 2.2 times the number of customers than used previous services.”

Air quality opening

Air quality issues are “an opportunity for Euro 6, which is a first-class low-emission product. Bus is the only way of securing transfer from cars in most cities,” he says.

As an industry: “To succeed, we need to open constructive discussions about integration, multi-operator ticketing and branding, with no more false divides between operators or local authorities.

“It’s all about what the passenger wants – in every decision, in every intervention, we must be certain the customer will benefit.”

He envisages a sector that is ideally placed to exploit the benefits of electrification, connectivity and autonomy. One that is “champing at the bit to invest in the clean, smart, high-priority, high-frequency and high-volume corridors” to feed employment, education, retail and leisure centres.

This, he says, is a sector that is talking to UK, Scottish and Welsh Ministers and local authorities “with a new can-do ambition, looking for a private/public partnership not an endless series of subsidy crutches.”

It is, he says, about “key investments and interventions that create the opportunity for buses to play out their full potential.”

Honesty

“But we need some mutual honesty if we are to exploit these opportunities,” he cautions.

For bus operators this means: “No more going through the motions on partnership. No more tolerating second-best delivery.”

For local authorities: “No more treating bus as an afterthought. No more treating private-sector operators as an object of suspicion. No more muddling through. No more yo-yoing on policy.

“We deliver together or we deliver nothing.”

There are encouraging signs in some of First’s areas: “Leeds gets it, Cornwall gets it, Hampshire gets it and so do some others. I’m hopeful that Glasgow may be about to get it.”
First continues to invest where ‘local partners are willing’. One of the latest intakes with USB ports and bell pushes on the seat backs

But that honesty must extend everywhere. In Manchester, elected Labour Mayor Andy Burnham has just authorised £11.5m to “develop a franchise strategy”.

Five years ago First ‘repositioned’ the Manchester business in terms of fares, cutting day, weekly and monthly prices by 28% overnight. The result was fare-paying passengers up by 16%. Although it wasn’t enough to cover the newly-created financial gap, it was part of a five-year strategy for the region.

First has just put in 130 new buses, and improved service quality. “We were investing for the future and also bought Finglands from EYMS, enabling us to launch cross-city services, connecting the northern city network with universities and hospitals on the south side.”

Clear strategy

“The strategy was that we would take a hit in that first year or two, to build back up.” That was “very badly affected” by increasing congestion and Metrolink tram extensions works in the city centre, causing all buses entering the centre to be “extraordinarily unattractive” to customers.

“We lost 10% of our passengers on the affected services and that congestion lasted for over two years.”

That caused First to “re-draw the plan”, while in 2015-16 the effect of online retailing on the high street trade generated a further decline. Both impacted on the 2013 recovery plan. “We know we did the right thing. We are having to be much more patient.” In the year to March 2017 it made a small loss on a £85m turnover, according to accounts filed at Companies House.

With the “likelihood of plans for franchising,” it makes the “recovery and returns we need to justify the investment we’ve made, much more difficult to see,” adds Giles.

“In 2015 we put in 21 extra vehicles, just to try to maintain the service, as part of our commitment to create a strong network.”

He repeats that First is willing to invest where local partners are prepared “to do their bit.”

But in Manchester, the authority is focusing on franchising, which means the returns for any investment are “uncertain, as we don’t know what the shape of the business model will be.

“As a result, we’ve not invested in the Manchester fleet over the last two years (beyond the previously committed Vantage network).”

Tough decisions

The First Bus network will continue to change. In Berkshire “we had a number of loss-making services, exacerbated by congestion in Slough. It’s an extraordinarily difficult place to run buses whether they are commercial or supported. We have twice put additional resource into the market, but it was declining because congestion meant it could not be an attractive product.”
Conversations to be had with local authorities about opportunities surrounding air quality and fleet upgrades

So First made the difficult decision to reduce its local network. “We are committed to Slough; we would have left if we weren’t, but we can’t afford to lose that amount of money on the town services.”

First has also retrenched in Essex, to match supply with demand, while in Weymouth the winter timetable is reduced at the very seasonal operation. Similarly, in some areas of Somerset town services have been reduced, although inter-urban services remain robust.

In some cases it’s about reducing frequencies, rather than cutting routes. There’s also an impact when councils cut tendered routes. “It’s easy to underestimate the effect on a town network, where there are interchanges, when tendered rural feeders are removed,” adds Giles.

Up for the challenge

The networks will continue to evolve, he adds: “The emphasis is on continuing businesses. They must make enough money to be able to plough back the profits and afford to invest.

“This is ever-more demanding with the move to clean air.

“We are up for the challenge of delivering great bus services that enable the roadmap to zero emissions to be a reality.”

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Volvodart said:

http://www.route-one.net/articles/Operators/A_very_big_opportunity

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Volvodart said:

He will know the 2018 expected results by now!

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Volvodart said:

There is no real reason to suspect that the good progress shown in the December results will not continue. A lot of areas have had fare increases in 2018 which will help the margin.

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winston270twm said:

“First can’t be clearer: We will invest, and invest significantly, where local partners are willing to do their bit,” says Giles

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Volvodart said:

Did they refund passengers for the lost days? Will it cost that much for a day or two's disruption? They are not yellow school bus in USA! They have just started getting back to normal fare change situations after the fall in fuel prices. They had to invest in one small area to prove the strategy. Where would you have chosen that had sympathetic local authorities?

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Volvodart said:

They were never going to get anywhere near the double digit margin until they returned to normal type fare increases. Let us see what it is like from now on.

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