First Group: General Discussion

[WatcherZero]

Councils are by law banned from purchasing or setting up a new bus company.

 

[Robertj21a]

Councils are by law banned from purchasing or setting up a new bus company.

Are they ?

 

[In Focus]

Councils are by law banned from purchasing or setting up a new bus company.

Someone want to tell Lothian and Edinburgh council ?

 

[overthewater]

Reading, aswell.....

And Dumfries and galloway council and North Yorkshire council who had to step up companies to fill gaps

 

[freetoview33]

Reading, aswell.....

And Dumfries and galloway council and North Yorkshire council who had to step up companies to fill gaps

I know they are allowed to run services if they put it out to tender and no one else wants to run it, like South Gloucestershire Council run the 634.

 

[Flange Squeal]

Where have you been First Manchester was sold ti Go Ahead.

Only one depot.

 

[Big Ralphie]

Pretty sure that Aberdeen council back in the seventies used to run there own buses with exact money to speed up journey time.

 

[carlberry]

Someone want to tell Lothian and Edinburgh council ?

If there is a law it might not apply in Scotland however none of the Lothian councils or Edinburgh Council are likely to want to purchase or setup a new company as they already have one.

 

[In Focus]

If there is a law it might not apply in Scotland however none of the Lothian councils or Edinburgh Council are likely to want to purchase or setup a new company as they already have one.

Which was exactly the point !!

 

[Megafuss]

Which bits would you buy if you had the means (or if you were First, which bits would you keep and spin off)

Personally, I would only touch Bristol, Leeds, Eastern Counties and Cornwall. Glasgow at a push.

I actually quite like the Essex network, but it seems a lot of hard work for not much return.

 

[Robertj21a]

Which bits would you buy if you had the means (or if you were First, which bits would you keep and spin off)

Personally, I would only touch Bristol, Leeds, Eastern Counties and Cornwall. Glasgow at a push.

I actually quite like the Essex network, but it seems a lot of hard work for not much return.

Presumably the bits most likely to still be profitable, so logically, it has to be West Yorkshire, Glasgow, Leicester, Cymru and, if it's now fully sorted, Bristol. Possibly Hampshire too ??

 

[Astradyne]

Someone want to tell Lothian and Edinburgh council ?

Created before the law was changed ... so has grandfather rights.

These community transport 'companies' are operating in a grey area of the law

 

[TheGrandWazoo]

Pretty sure that Aberdeen council back in the seventies used to run there own buses with exact money to speed up journey time.

Hmmm...whatever happened to that firm?

 

[DragonEast]

I suspect the interesting thing is that this has probably been on the cards for some considerable time, but like it seems everything at First it takes an age, and still comes out half-baked. Unite's response is smart and throws a well timed and aimed spanner in the works. It's at least a master of clarity compared to anything First say - what does their strategy statement on First Bus actually mean? Yes we all have our own interpretation, but that's the point. It still looks to me like a Board stumbling around in the dark, trying to find the exit.

First Bus have done some good things, but none of it has looked to me to be co-ordinated with a sense of planning and direction or even to have demonstrated a commitment to the UK bus industry; rather more opportunistic. Like taking advantage of grants, where available, and a few good appointments. It's the sort of thing an old-fashioned cowboy operator might have done. The local example that did it for me was when local operator Essex invested in new depots a few years ago, and then gave up. The MD left for whatever reason (and First seem to have a history of senior people giving up - and admittedly others getting stuck, but may be the wrong way around), and wasn't replaced, and the services just treaded water when everyone else was busy restructuring and investing in their networks. £53m is not a small operation, and when costs still exceed income something is seriously awry. Isn't part of the job of the senior management to make sure it's sorted out? First locally just tinkered, passing time. That's not a strategy. (Yet their strategy talks of Clacton, a tiny depot; that's not a strategic Board matter). It all looks like a right muddle. Communication is two way, but not it appears in First's case, internally or externally. Perhaps because they have nothing to say. Like kids, local management need support, not just being "told what to do" all the time. It's insecurity, not strategy. Bad parenting. What has really happened in First Bus over the last 5 years? Their published "strategy" and still, with the exception of this latest "statement", appears to have been written in the Moir years.

This is a cynical (even unfair) and certainly incomplete view. Of course. But is it too far off the mark? Crude impressions are sometimes a very good guide. We can defend First, of course. But perhaps the question is why we have to?

 

[Cesarcollie]

This is an ideal opportunity for Councils to take back buses into public ownership. First Greater Manchester would be a good starter. Perhaps the Mayor should get in early and start the ball rolling.

If First Group services are merely sold off to the likes of Stagecoach, they will still be run only on a commercial basis and the operators will charge the earth for running non-profitable services. Only by being publicly owned will the Councils be able to use income from profitable routes (of which there are many) to be used to support less profitable but nevertheless essential services.

What? If there are ‘many profitable routes’ and the company is ‘charging the earth’ for running the unprofitable ones, my very basic maths would tell me First would be making lots of profit. But they’re not and that’s why they’re in this situation....so somewhere your logic doesn’t quite add up.....

 

[Andyh82]

Just like in the Arriva/DB news, I can’t see any mention of them selling off individual operators, this just seems to be a way for people to endlessly fantasise about other groups buying their local firm.

Does it not just say they will spin off UK operations as a separate company? Same as what it was said Arriva are doing?

 

[KGGXXXY]

Just like in the Arriva/DB news, I can’t see any mention of them selling off individual operators, this just seems to be a way for people to endlessly fantasise about other groups buying their local firm.

Does it not just say they will spin off UK operations as a separate company? Same as what it was said Arriva are doing?

Reads like that to me, so it would be "First Group (USA)" and "First Group (UK) PLC" two separate legal entities. I'm sure companies have done this in the past no need to rename the public face just the legal holding company.

 

[overthewater]

What benefit does this give First?

 

[TheGrandWazoo]

Just like in the Arriva/DB news, I can’t see any mention of them selling off individual operators, this just seems to be a way for people to endlessly fantasise about other groups buying their local firm.

Does it not just say they will spin off UK operations as a separate company? Same as what it was said Arriva are doing?

Exactly!

Too many people with overactive imaginations going “oooh - I could see X buying Y as it would be a good fit”

First and Arriva won’t want to spend months faffing around trying to sell bits and pieces.

 

[carlberry]

Which bits would you buy if you had the means (or if you were First, which bits would you keep and spin off)

Personally, I would only touch Bristol, Leeds, Eastern Counties and Cornwall. Glasgow at a push.

I actually quite like the Essex network, but it seems a lot of hard work for not much return.

I'm fairly sure if you approach the company they'll let you buy whichever bits you want if the price is right.

 

[winston270twm]

Don’t expect a bonanza from the great FirstGroup carve up The Greyhound bus business that is being sold off has been squeezed by low-cost flights

FirstGroup is what happens when bosses manage companies like fund managers. They buy growth at high prices. That is how a midsized UK company ended up with such a bizarre bundle of transatlantic activities; from the famous Greyhound coaches that criss-cross America to the 7.45 South West train service that is bound from Waterloo.

Long under fire for its absence of synergies and innate complexity, that muddled model has finally been poleaxed. The new chief executive, Matthew Gregory, has announced plans to sell the Greyhound business, to “separate” the UK bus operations and conceivably to run down the British rail side. What will remain is a US transportation business centred on running yellow school buses — an odd asset for a UK listed company to own but, well, ho hum.

Gamely Mr Gregory suggests this is not a capitulation to Coast Capital, a hedge fund that bought a 10 per cent stake and agitated for a break up. But the differences are mainly ones of speed, not fundamental direction.

Dismantling the group may lift some of the misery that has hung over the shares since First acquired Greyhound with the $3.6bn (£2bn) purchase of Laidlaw in 2007. Despite a slight bounce on Thursday, the stock is down 80 per cent over that time.

But investors should not expect a financial bonanza. Greyhound has been squeezed by customers switching from road transport to low-cost flights. It is worth a fraction of the $750m Brian Souter of Stagecoach once offered. The UK bus operation is still recovering from errors that led the group to push up fares excessively and cut services until customers went Awol. And rail is little better: dogged by political uncertainty and signs that passengers are again being priced off the railways. Its run-off value may be vestigial.

Sadly the same cannot be said for First’s pension fund liabilities. These are all too real; the UK buses alone have an actuarial liability of £390m were they all to be crystallised, although Mr Gregory hopes to arrange the restructuring to minimise that cost.

Investors may have imposed some focus on this unruly company. But they might also reflect on their role in creating the sprawl; encouraging bosses to behave like fund managers, buying sexy companies at high prices. Chasing the stock market is fundamentally a fool’s errand. It runs the risk of continually buying high and selling low — a sure-fire way over time to destroy value. Better to get managers to focus on the quotidian task of making the most of what they have.

https://www.ft.com/content/f84abcb8-82de-11e9-b592-5fe435b57a3b

I'm fairly sure if you approach the company they'll let you buy whichever bits you want if the price is right.

Not this time around, they've made the decision, they want it executed. Whilst they might get the right price for the better ops, they then could be stuck or get less for the poorer performing ops if they sell it piecemeal.​

 

[ivanhoe]

The latter point - outside London, it would be c.30-35% so would not get through CMA.

Mind you, it is an interesting point that there are relatively few areas where First and Arriva sit cheek by jowl. West Yorkshire is the obvious one, followed by Bolton, Leicester and bits of Essex.

I think Leicester alone would be problematic. Arriva and First are so dominant in both the City and with Arriva, the County. Interesting times ahead though. First Leicester is a really good operation and I’ve said before that Arriva do quite well in the County/City. Stagecoach aren’t exactly in expansive mode , the same with Trent Barton.

 

[TheGrandWazoo]

https://www.ft.com/content/f84abcb8-82de-11e9-b592-5fe435b57a3b

Not this time around, they've made the decision, they want it executed. Whilst they might get the right price for the better ops, they then could be stuck or get less for the poorer performing ops if they sell it piecemeal.​

Exactly - as well as taking time, they won’t want to flog Bristol and be stuck with Somerset!

 

[overthewater]

Yes but would any NEW owner want to keep all off it?

 

[Bletchleyite]

Someone want to tell Lothian and Edinburgh council ?

They've already got theirs, therefore they neither need to purchase nor set it up.

 

[Bletchleyite]

I'm fairly sure if you approach the company they'll let you buy whichever bits you want if the price is right.

The thing is, what are you actually buying? A load of buses and ageing depots, and existing T&Cs of staff? It's hard to suggest that FirstGroup has an awful lot of goodwill.

Why wouldn't you simply buy your own buses, recruit and set up competing routes? Or if you couldn't be bothered with the competition, wait for First to shut up shop and go in and set up, much to everyone's delight? (Not least your own when you have a ready pool of unemployed staff to recruit on any T&Cs you like?)

 

[Volvodart]

Exactly!

Too many people with overactive imaginations going “oooh - I could see X buying Y as it would be a good fit”

First and Arriva won’t want to spend months faffing around trying to sell bits and pieces.

If they sell it in one piece, there is at least a chance Firstgroup will get rid of the pension liability, which would be unlikely in a piecemeal disposal with probably some closures.

 

[WatcherZero]

Someone want to tell Lothian and Edinburgh council ?

The ban came in the Transport Act 1985, existing municipal bus companies had to be made arms length, and the ban was reconfirmed in another transport act a couple of years ago. Lothian Buses created in 1919 predate the ban. Most municipal bus companies were sold off or went bust between 1976 and 1984 when competition was introduced.

As has been mentioned you are allowed to create Community Transport Companies but they are quite different, specifically they are non-profit and are banned from charging a fare purely for transport services (so for example have to operate by subscription to another organisation such as a social/church/charity group or package prices e.g. accommodation or a meal included in the fare). So they are principally ring and ride, community lifeline services e.g. from a village without regular bus services to the shops, or for other social benefit, e.g. transporting elderly to hospital or on outings.

 

[winston270twm]

Yes but would any NEW owner want to keep all off it?

That's up to the NEW owner to hack off & sell the bits it doesn't want.

First Group bows to calls for break-up
Robert Lea, Industrial Editor

May 31 2019, 12:01am, The Times

First Group acquired its American businesses, including the school buses, in a £1.9 billion deal in 2008FIRST GROUP

One of Britain’s biggest transport groups has capitulated to investors’ demands and proposed breaking itself up.

However, the American hedge fund that holds 10 per cent of First Group and has been urging change believes that the company is embarking on the wrong type of restructuring and said that it will plough ahead with demands for an extraordinary meeting of the company to sack the directors.

First Group, which has its headquarters in Scotland and is listed in London, plans to turn itself into an exclusively American business, concentrating on its yellow school bus and university and airport shuttles in the US. It will sell its UK bus operations and Greyhound, its chronically underperforming American intercity coach business. It also strongly signalled that it would run down its rail interests in the UK. It operates GWR, between London Paddington and Wales and the West Country; South Western Railway, out of London Waterloo; and the Transpennine Express in the North.

First’s rail problems yesterday resulted in it taking a £102 million charge to cover future losses at South Western and appears to amount to a withdrawal from bidding to run the HS2 line between London and Birmingham for which it was short-listed.

First Group employs 100,000 people, operates 50,000 vehicles and has £7.1 billion of annual revenues. It is valued at £1.35 billion. It reported £98 million of losses for the year to March 31 on top of £326 million of losses last year.

Its proposals were rubbished by Coast Capital, which has built up a 10 per cent stake in First with the aim of making it realise the full value of its five divisions. It wants First to keep the UK bus business but spin out and list the American businesses in the US where it says they will enjoy a market rating of £3 billion.

“The plan is to focus on North American operations but there are no North American transport experts on the board,” James Rasteh, Coast’s founder and chief investment officer, said. “We do not trust this board and management team to lead any disposal.”

Coast wants First to call an extraordinary meeting of shareholders by early July at which it wants to replace six First directors with six of its own, headed by Steve Norris, 74, the former Conservative transport minister. First Group’s shares closed 4p higher at 114½p.

https://www.thetimes.co.uk/article/first-group-bows-to-calls-for-break-up-xh0bgrvp7

 

[In Focus]

Created before the law was changed ... so has grandfather rights.

These community transport 'companies' are operating in a grey area of the law

Was deregulisation not created to dismantle corporations and put bus companies into private ownership by previous Tory government?
I do not recall any "grandfather rights" during this process (although age any have effected my recollection of it