First Group: General Discussion

[Goldfish62]

First Kernow (Cornwall) is one of the good ops along with loads of new buses

Yes, 50% of the bus fleet has been brand new within the last couple of years.

 

[mic]

Bolton is next in line in the First Manchester sale, Oldham deal may be off at least for time being.

read on another thread that Oldham Could go under west Yorkshire control but dout that would happen

 

[mic]

49921-23 which have recently been refurbished

whoops forgot about those 3

 

[TheGrandWazoo]

Transdev by any chance? Wonder why Oldham been put off? Surly that has to be done within 6 weeks?

They'd like it to be done in FY2018/9 but there is no need to have it done in 6 weeks.

Just returning to my Essex speculation. Becalmed (or stuffed, as I put it) about sums it up. So I too suspect nothing will happen, yet.

The irony is that the Essex OpCo has, I suspect, two of the best local independents in the Country who could teach them a thing or two about running buses: Ensign and Stephensons of Essex, if they were interested in learning.

Go Ahead seem to have problems in making anything work in East Anglia, so the worry is we might move from one shambles to another, though if their mutual Manchester PR is to be believed they both have this "good relationship". And they seem to have the resources (including management?) if First don't.

I really can't see what the First OpCo has to be competitive for resources within First, so how long can it keep becalmed, and afloat? As a meal it looks indigestible though. There is no Council money tree to help. They have to make do with the begging bowl to the property industry, on which First make a decent stab; but it's how well you use it, and I'm not sure they've really got the hang of that one yet.

We've waited approaching a decade (EDIT in Essex, at least) for First to get their act together. So how long do we have to give them?

Apologies for removing some of your quotes but only for brevity reasons rather than content ; whilst we may not always agree on every point, I do agree with some of your points. I think we can recognise some common themes from across the group. I'm not certain that First Essex is stuffed - potentially, it's probably a better bet that FSY in many respects. I can't believe that operating costs have gone up by 10% in a year - therefore, it would suggest that there's a load of one-offs being taken in trading. The ticket machines will be one area though most will relate to Clacton - don't know how much in redundancies and asset write offs so whilst it's recorded a thumping loss, that's possibly misleading.

Now, First Essex is one of the OpCos that I don't know well. Looking from a distance, it seems becalmed. Can't speak on areas like service delivery etc but in terms of new vehicles, marketing, etc, it looks like not much is going on, even in comparison to FEC. Whilst they have had new fleet in 2014-6, they are another of those OpCos that will have to rely on cascades given the constraints on new vehicles. Hence, they are are managing on a diet of middling cascades from Scotland and West of England and there's a lot of elderly Darts to get rid of. The odd thing is that FEC seem to be getting things right and so why the lessons can't be transferred south of Dedham, who knows?

Not certain if First and Go Ahead have a great relationship, judging by what's going on in Southampton at the moment, or indeed the job that First have done on them in Norfolk/Suffolk. More that First wanting to sell Manchester suits them, and Go Ahead have a strategic aim to grow and so things just align!

 

[DragonEast]

They'd like it to be done in FY2018/9 but there is no need to have it done in 6 weeks.
...
Now, First Essex is one of the OpCos that I don't know well. Looking from a distance, it seems becalmed. Can't speak on areas like service delivery etc but in terms of new vehicles, marketing, etc, it looks like not much is going on, even in comparison to FEC. Whilst they have had new fleet in 2014-6, they are another of those OpCos that will have to rely on cascades given the constraints on new vehicles. Hence, they are are managing on a diet of middling cascades from Scotland and West of England and there's a lot of elderly Darts to get rid of. The odd thing is that FEC seem to be getting things right and so why the lessons can't be transferred south of Dedham, who knows?

Not certain if First and Go Ahead have a great relationship, judging by what's going on in Southampton at the moment, or indeed the job that First have done on them in Norfolk/Suffolk. More that First wanting to sell Manchester suits them, and Go Ahead have a strategic aim to grow and so things just align!

You're right that the local action that's apparent is in EC (and the regular cascades) - though I'm told the MD is currently spending most of his time in Chelmsford; doing what though, I don't know.

Clacton was a small depot, and on closure the enhanced inter-urban work transferred to Colchester, so effectively it was the poorer East Clacton was affected and left to Go-Ahead. I suspect it was less a sudden change of plan than just things speeding up what was planned in consequence of the consolidation of Colchester's ancient depots into a modern facility (with spare capacity) in The Hythe; perhaps because the business climate was deteriorating already? Clacton's depot was pretty well straight handed over to the new Council refuse contractor, so that might have helped if they were waiting too.

Looking at the bigger picture Eastern National and Eastern Counties came from different cultural backgrounds, and I don't think until recently First bothered about meshing them together - as elsewhere. So I suspect transferring learning is more difficult than we might expect. What I wonder if may be more important though, is that First seem to have decided to import the redundant London management into Essex as a wholesale change. As all operators have found - the Home Counties isn't London, where TfL takes all the risk, whereas in the Shires the vitally important thing is to match your resources and demands, and it seems to me to become equally important what you don't do (you can't afford) as the things you do! If it was a lesson that wasn't learnt fast enough then the ramifications could take a long time to work out of the system, as they took some time to become wholly apparent. No one ever complains about too many buses! (London of course also ran Slough, which under it's new management has retrenched too, as everyone points out; but I think, successfully). The successor ex-London MD disappeared without explanation a couple of years ago too (though in fairness the same happened to the last couple at Eastern Counties, who can be credited with its turnaround which has been consistent over a decade). These things don't (usually) just happen overnight. Of course it's much more difficult to dig ourselves out of a hole than into one, and rarely obvious. I don't know what First should do in Essex; but it seems to me that what is out of kilter is not the revenue, which seems to hold up remarkedly well, but the costs. The exceptionals don't help, of course, but I just don't think they tell the whole story*. It looks a very inefficient network if measured by moving the maximum number of passengers with the least resources.

*It was highlighted for me the year earlier, without the exceptionals. My recollection is that Essex just about broke even on £50m income. Compared with Stagecoach East in West Anglia (which has a bigger area with much the same characteristics; and staffing levels - which might be an indicator of the size of operation, though with Cambridge 5 P&Rs and less public support) which had some £60m income and made some £8-10m profit). That's still a lot of difference to account for!

 

[NorthernSpirit]

Why isn't York on the list for the same reason?

* Worcester - no issues.
* Potteries - Its starting to make money and isn't Isolated
* Leicester - First does not control 100% of the company.
* Slough - it's the only one that could make sense as First has rolled back so much.

In regards with York, I recall the whole operation is/was registered as First West Yorkshire & York Ltd which is based on Donisthorpe Street in Leeds. The fleet in York (the last time I checked) had Donisthorpe Street on the legals which also suggests York is connected to the WY ops.

If Oldham is retained (for whatever reason) I do imagine seeing it being managed the same way as York is.

 

[overthewater]

Oldham is probably only being kept because the bidders are unsure about the operations, I still think there could be some swapping around to get the deal done, if that make any sense.

 

[Andyh82]

Or there hasn’t been sufficient bidders at a sufficient price as yet.

Doesn’t have to mean it is being kept forever like some seem to be suggesting

 

[tbtc]

Just a reminder that First have said that *any* operating unit is available for sale. It's not their reluctance to sell, it's the lack of buyers.

This bears repeating.

There's a lot of assumption on this thread that First will only sell the unprofitable bits of the business... but in order to sell there has to be a buyer... and if they want to raise money to pay off their debts then they need to raise some proper money then they aren't going to raise that by selling loss making/marginal operations - given how other operators in the UK are retrenching or stagnating you might struggle to even sell a reasonably profitable operation because who has the money to buy something as big as a depot with 100+ buses?

I don't know that being "remote" is as big of an issue as some people make out though - First seem to like moving buses from Bristol to Glasgow (and similar long distance swaps) but then again National Express seem to cope with a depot in Dundee - it's not like "Risk" where you try to collect all of the adjacent territories - GoAhead seem happy to pick up a depot in Manchester far from their other operations (just like their recent purchase in East Yorkshire) - Transdev seem okay about their share of the Nottingham operation not being directly linked to the North Yorkshire/ Lancashire corridor that most of their routes are based in - West Cost Motors have stretched all the way to north east England with a huge gap in between the Borders Buses routes into Edinburgh and the Glasgow Citybus services in (erm) Glasgow. I think people are over-egging things a bit.

More to the point, look at the first few pages of this thread - people were making a number of suggestions that were rather wide of the mark (with hindsight) - I wouldn't have guessed that First would be keeping Stirling/ Cornwall whilst selling Manchester - they are increasing their presence in some parts of Rotherham whilst scaling back in some big cities - it's not a game I'd wager any money on!

 

[winston270twm]

This bears repeating.

There's a lot of assumption on this thread that First will only sell the unprofitable bits of the business... but in order to sell there has to be a buyer... and if they want to raise money to pay off their debts then they need to raise some proper money then they aren't going to raise that by selling loss making/marginal operations - given how other operators in the UK are retrenching or stagnating you might struggle to even sell a reasonably profitable operation because who has the money to buy something as big as a depot with 100+ buses?

I don't know that being "remote" is as big of an issue as some people make out though - First seem to like moving buses from Bristol to Glasgow (and similar long distance swaps) but then again National Express seem to cope with a depot in Dundee - it's not like "Risk" where you try to collect all of the adjacent territories - GoAhead seem happy to pick up a depot in Manchester far from their other operations (just like their recent purchase in East Yorkshire) - Transdev seem okay about their share of the Nottingham operation not being directly linked to the North Yorkshire/ Lancashire corridor that most of their routes are based in - West Cost Motors have stretched all the way to north east England with a huge gap in between the Borders Buses routes into Edinburgh and the Glasgow Citybus services in (erm) Glasgow. I think people are over-egging things a bit.

More to the point, look at the first few pages of this thread - people were making a number of suggestions that were rather wide of the mark (with hindsight) - I wouldn't have guessed that First would be keeping Stirling/ Cornwall whilst selling Manchester - they are increasing their presence in some parts of Rotherham whilst scaling back in some big cities - it's not a game I'd wager any money on!

The big one with selling Manchester is obviously the potential risk of franchising, I assume this is why buyers are only prepared to risk buying one depot each. The other big one with any buying any First operation even if they are the 'crown jewels' are pension deficits. The other stumbling block is there may well be plenty of potential buyers, but there may be a big gap between buyers valuations/offers and what First want/need. Hence the lack of assett sales to date.

It's a buyers market for acquistions & used vehicles, as everyone wants Euro 6.

 

[overthewater]

Of course would the CMA allow First to sell off Southampton or Colchester to Go-ahead? Would it allow Potteroes to be sold off to D&G? Stirling and Falkirk to Stagecoach etc

The people who would want to buy might not be allowed.

 

[mbonwick]

Stagecoach East too are embroiled in a sort of falling out with the new Cambridge and Peterborough Regional Mayor (who himself seems to need to embark on a steep learning curve, which might lead him anywhere), and I thought perhaps the prospect of a move into Essex could usefully hedge their bets, as Stagecoach seem to have this reputation for being able to sort anything out. (And maybe a sort of filling in the sandwich between their West Anglia and East London ops). I thought too they said something when they sold their American ops about concentrating on opportunities in British bus?

Stagecoach East have their own, fairly major problems to work through - and I don't mean with the Regional Mayor. Don't expect them to take on any more pain for the forseeable.
They're currently in a hole that would have attracted a lot of attention on here if it was First in the same position...

 

[Surreyman]

The big one with selling Manchester is obviously the potential risk of franchising, I assume this is why buyers are only prepared to risk buying one depot each. The other big one with any buying any First operation even if they are the 'crown jewels' are pension deficits. The other stumbling block is there may well be plenty of potential buyers, but there may be a big gap between buyers valuations/offers and what First want/need. Hence the lack of assett sales to date.

It's a buyers market for acquistions & used vehicles, as everyone wants Euro 6.

You mention Pension Deficits, surely First retain the 'pension legacy' liabilities, staff who are 'TUPeD across to the new owner start afresh with the new owners pension scheme and First are responsible for paying staffs historical pension benefits earned up to the date of sale.
I can't imagine any purchasing company would want to take on past Pension liabilities.

 

[Surreyman]

Of course would the CMA allow First to sell off Southampton or Colchester to Go-ahead? Would it allow Potteroes to be sold off to D&G? Stirling and Falkirk to Stagecoach etc

The people who would want to buy might not be allowed.

Agree about Southampton, Colchester has an Arriva operation, so maybe?
They might just allow Stirling to be acquired by Stagecoach, but would have an enquiry I suspect Stirling (Bannockburn) is probably loss making or at best breaking even.

 

[winston270twm]

You mention Pension Deficits, surely First retain the 'pension legacy' liabilities, staff who are 'TUPeD across to the new owner start afresh with the new owners pension scheme and First are responsible for paying staffs historical pension benefits earned up to the date of sale.
I can't imagine any purchasing company would want to take on past Pension liabilities.

Not sure how it all works tbh, but I have heard whispers that large pension deficits are putting off potential buyers. And would long term First employee's really want to be starting a brand new pension & freezing old ones, if a nearing retirement age? I thought the idea behind TUPE, was that all existing terms, conditions & benefits transferred with the staff to the new owners.

Of course would the CMA allow First to sell off Southampton or Colchester to Go-ahead? Would it allow Potteroes to be sold off to D&G? Stirling and Falkirk to Stagecoach etc

The people who would want to buy might not be allowed.

As First Potteries is a nothing operation & D&G are largely involved with tendered work, I don't really see it being a issue.​

 

[Volvodart]

You mention Pension Deficits, surely First retain the 'pension legacy' liabilities, staff who are 'TUPeD across to the new owner start afresh with the new owners pension scheme and First are responsible for paying staffs historical pension benefits earned up to the date of sale.
I can't imagine any purchasing company would want to take on past Pension liabilities.

The deficit problem is with the defined benefit schemes (which have been closed anyway). I presume current employees now have some sort of defined contribution scheme, which could possibly be transferred across to the new employer.

 

[TheGrandWazoo]

The deficit problem is with the defined benefit schemes (which have been closed anyway). I presume current employees now have some sort of defined contribution scheme, which could possibly be transferred across to the new employer.

Right here goes (note: I’m not a pensions or HR expert)

TUPE covers existing Terms and Conditions of Employment so that’s areas such as pay and bonuses, notice periods, enhanced redundancy etc. It does not cover pensions so when transfer comes, the individuals’ First scheme stops and the liability crystalises. They then get begin a pension with the new employer. Even Defined Contribution (DC) schemes vary so First may be putting in 5% whereas someone else’s scheme might have been at the 3% minimum - a new employer will want their own scheme on that basis and for ease of administration.

For the employer(s), there is no set rule for what happens with pension liabilities. In this case, it would seem that the pension fund does not generate sufficient funds (deficit) to cover the liability and this probably refers to the old defined benefit (DB) scheme where you have to pay out a sum irrespective of the health of the fund. In that case, whoever has accepted responsibility will have to make up the shortfall.

Naturally, First would like a clean break. Any buyer doesn’t want to buy a firm for a perceived bargain and then have to continually pay extra to cover the deficit. In some instances, the seller may pay a lump sum (dowry) to cover the likely deficit to the buyer in order to transfer future obligations (and risk) to the purchaser.

Often, how and where the pensions liability sits is driven by the relative position of strength in negotiations. In these instances, you might feel that First just want to offload.... but at whatever price? No point in selling off assets, taking a balance sheet hit AND still losing money every day because you’re still liable for the pensions. Also, the buyers aren’t just doing this on a whim - they are looking to grow their business (they want to buy) and likewise don’t want to buy “cheap” and discover it’s anything but! Hence the negotiations.

Sorry if that’s not a concise as it could be

 

[DragonEast]

Stagecoach East have their own, fairly major problems to work through - and I don't mean with the Regional Mayor. Don't expect them to take on any more pain for the forseeable.
They're currently in a hole that would have attracted a lot of attention on here if it was First in the same position...

Yep. The big problems at First Essex are, and have been for years, at the big Basildon and Chelmsford depots (where coincidentally they face virtually no competition). (Though before anyone corrects me, it's nothing like plain sailing at Colchester or Hadleigh either). They tinker endlessly; but it seems to need more drastic surgery, though the passengers need careful consideration both in the planning and the PR. Not something for which any of larger bus companies (at least) are known for. Whilst they hang on they need to keep the revenue up, certainly not reduce it.

In fact, as you say, it all sounds rather reminiscent (operationally) of Stagecoach East. Same issue at the bottom of it: incorrigible congestion. That's why, in terms of disposal, I called them indigestible. (And that's before we get to the pensions - Essex has always been a big business that has hardly shrunk in numbers. Even recently much of Clacton's and Braintree's business has been transferred within the OpCo). Chopping around the fringes (which, of course, wasn't where the operational problems were) dresses up the current balance sheet, buying a bit of time. Though for what? That's First's quandary.

I think the main difference between Stagecoach East and First Essex though is that Stagecoach have some poor territory economically, in Peterborough and the Fens and around Bedford; whereas there is no doubt that economically Essex is thriving, even if mostly thanks to London. Stagecoach East are therefore to some extent the victims of circumstance, First Essex are pretty well entirely the architects of their own misfortune.

Perhaps Bristol and Leeds are only dealing with it with massive investment, which there is no prospect of in the second (or third) division East Anglia. It's working too, a bit, in Norwich (and perhaps Ipswich) which also got on with their restructuring a decade ago. But there just isn't enough to go round. In a mess. Like their football teams.

 

[winston270twm]

Right here goes (note: I’m not a pensions or HR expert)

TUPE covers existing Terms and Conditions of Employment so that’s areas such as pay and bonuses, notice periods, enhanced redundancy etc. It does not cover pensions so when transfer comes, the individuals’ First scheme stops and the liability crystalises. They then get begin a pension with the new employer. Even Defined Contribution (DC) schemes vary so First may be putting in 5% whereas someone else’s scheme might have been at the 3% minimum - a new employer will want their own scheme on that basis and for ease of administration.

For the employer(s), there is no set rule for what happens with pension liabilities. In this case, it would seem that the pension fund does not generate sufficient funds (deficit) to cover the liability and this probably refers to the old defined benefit (DB) scheme where you have to pay out a sum irrespective of the health of the fund. In that case, whoever has accepted responsibility will have to make up the shortfall.

Naturally, First would like a clean break. Any buyer doesn’t want to buy a firm for a perceived bargain and then have to continually pay extra to cover the deficit. In some instances, the seller may pay a lump sum (dowry) to cover the likely deficit to the buyer in order to transfer future obligations (and risk) to the purchaser.

Often, how and where the pensions liability sits is driven by the relative position of strength in negotiations. In these instances, you might feel that First just want to offload.... but at whatever price? No point in selling off assets, taking a balance sheet hit AND still losing money every day because you’re still liable for the pensions. Also, the buyers aren’t just doing this on a whim - they are looking to grow their business (they want to buy) and likewise don’t want to buy “cheap” and discover it’s anything but! Hence the negotiations.

Sorry if that’s not a concise as it could be

Cheers, TGW - That's helps clarify my thoughts and rumours I'd heard.

 

[Tempest3K]

In regards with York, I recall the whole operation is/was registered as First West Yorkshire & York Ltd which is based on Donisthorpe Street in Leeds. The fleet in York (the last time I checked) had Donisthorpe Street on the legals which also suggests York is connected to the WY ops.

When I first moved up here, some vehicles had the James Street Depot address on them, but everything seemed to get switched over to Donisthorpe Street under First West Yorkshire after the 08 batch of vehicles (mainly P&R replacement) arrived (if I remember correctly).

 

[Beemax]

Of course would the CMA allow First to sell off Southampton or Colchester to Go-ahead?

Southampton represents a Stagecoach-shaped gap, so they would be more likely purchasers than Go-Ahead (who probably wouldn't be allowed). If the price were right, it might even attract expanding minnows such as Xelabus.

 

[158756]

The big one with selling Manchester is obviously the potential risk of franchising, I assume this is why buyers are only prepared to risk buying one depot each.

I think Go Ahead must be betting on franchising. Queens Road looks perfectly placed for any routes into the city centre. Without it, what have they bought? An incomplete set of radial routes, many with competition from Stagecoach or whatever happens to the other First depots, shorn of the rest of the network First had, and First couldn't make it work.

If indeed Oldham doesn't sell it might be the case that no one sees it as a viable proposition as a single depot, so franchising is the only hope to get another new entrant interested. The case for franchising has just got stronger anyway - passengers will be the losers from this sale and fragmentation of services, Stagecoach I see as the only potential winners without regulation.

 

[goldisgood]

I think Go Ahead must be betting on franchising. Queens Road looks perfectly placed for any routes into the city centre. Without it, what have they bought? An incomplete set of radial routes, many with competition from Stagecoach or whatever happens to the other First depots, shorn of the rest of the network First had, and First couldn't make it work.

If indeed Oldham doesn't sell it might be the case that no one sees it as a viable proposition as a single depot, so franchising is the only hope to get another new entrant interested. The case for franchising has just got stronger anyway - passengers will be the losers from this sale and fragmentation of services, Stagecoach I see as the only potential winners without regulation.

Surely there must be plans to introduce some form of joint ticketing as part of Onebus, no? Joint ticketing exists in various areas, often with Go Ahead and Stagecoach, so hopefully something will be worked out.

 

[Kahuna47]

Surely there must be plans to introduce some form of joint ticketing as part of Onebus, no? Joint ticketing exists in various areas, often with Go Ahead and Stagecoach, so hopefully something will be worked out.

I'd imagine they would accept the current System One/Get Me There tickets straight off the bat...

 

[goldisgood]

I'd imagine they would accept the current System One/Get Me There tickets straight off the bat...

I thought that joint tickets would exist! Are they much more expensive than normal tickets, as if not then passengers won't lose out so badly except for along Rochdale Road where there will be 3 companies operating frequent services into the city - Go Ahead on the 17 and 18, Stagecoach on the 56/156, 112/113 and 118 and First on the 81/81A and 163. Stagecoach could see more people using their service down here as they will run more buses.

 

[Kahuna47]

I thought that joint tickets would exist! Are they much more expensive than normal tickets

They are, but only slightly. FirstDay are a fiver, and the S1 Day tickets are 5.80 IIRC. Weeklies are 17 quid compared to 19 for S1. System One covers pretty much every bus company in GM, with options for tram and/or train to be added too.

First do have a couple of corridor specific saver tickets too.

Cheers,

K

 

[overthewater]

Oldham depot, I dont know why but I think we might see a split between Go Ahead and Trasndev for that place.

 

[goldisgood]

Oldham depot, I dont know why but I think we might see a split between Go Ahead and Trasndev for that place.

Go Ahead have said that they won't expand further in Manchester for the time being, but then again last week First said they weren't going to sell immediately!

 

[Megafuss]

Stagecoach East have their own, fairly major problems to work through - and I don't mean with the Regional Mayor. Don't expect them to take on any more pain for the forseeable.
They're currently in a hole that would have attracted a lot of attention on here if it was First in the same position...

Yep, from people I have been speaking to there, the MD replacement came just in time. They say a combination of some terrible commercial decisions with operations and engineering going down the toilet put East in a black hole towards the middle of last year.

Things are better now, in a "they couldn't be much worse" kind of way, but am told things are actually starting to emerge from the rubble and the new MD is making a positive impression.

With a rebuild job going on at East, I am confident Stagecoach will not be touching any First operations in the Anglia area.

 

[overthewater]

Is this new MD the person that pulled Stagecoach out of King lynns