First Group: General Discussion

[David Verity]

To be honest I've lost track of who runs a number of opcos. I'll start a new thread, and see if we can piece together current structures.....

In travelling from home (First Huddersfield territory) to work (First Sheffield) I was always struck by how scruffy the Sheffield fleet looked by comparison despite having younger buses. I wish the new broom every success where nobody else seems to have been able to crack the problem. The SCT/SJOC fleet was in a run down condition in the early days of SYPTE when mass hirings from Manchester were the order of the day. Sheffield is still good bus riding territory and it deserves better.

 

[TheGrandWazoo]

In travelling from home (First Huddersfield territory) to work (First Sheffield) I was always struck by how scruffy the Sheffield fleet looked by comparison despite having younger buses. I wish the new broom every success where nobody else seems to have been able to crack the problem. The SCT/SJOC fleet was in a run down condition in the early days of SYPTE when mass hirings from Manchester were the order of the day. Sheffield is still good bus riding territory and it deserves better.

Like this....

It may have been December 2018 with some road grime and salt but those water marks have been there a long time!

 

[Galaxy]

FSY has in recent years appeared to be very unloved and in a state of being run down rather than exploited. This isn't an operation that is going to turn round overnight and will take many months, if not years, of righting the wrongs of the past.

Morale has been an issue here for a long time and the management have to shoulder that blame. Engineering teams need to be looked at first and an increase in quality control and engage with the teams. This is a relatively easy win and will help build the next phase.

Although the Mainline brand is long gone, many in South Yorkshire are still aware of it and may even now view this favourably. It isn't the right time to relaunch a brand for South Yorkshire, but a new, revitalised look with better presented vehicles with a local feel are all elements that can be used to relaunch the operation.

Doncaster is a captive audience, as is Rotherham, but both are major towns that are on their backside. Sheffield has Stagecoach, but that should never be a reason to roll over and have its belly tickled, quite the opposite.

The opportunity to grasp the nettle could be here and if they want to, they could make a fist of it. A base at Rotherham would look like a backward turn but in many cases wouldn't. Midland Road wasn't suitable, but there are many areas in the town that could accommodate a depot and would support the town service and take back the X78, as Rotherham is the centre point for this once flagship route.

We've seen what GNW did with Manchester, First could well do similar with SY. It isn't over by any means, but the will has to be there. The answers are there, we just need the vision and the new broom might well see the benefits outweigh the pitfalls for not much pain.

 

[Cesarcollie]

FSY has in recent years appeared to be very unloved and in a state of being run down rather than exploited. This isn't an operation that is going to turn round overnight and will take many months, if not years, of righting the wrongs of the past.

Morale has been an issue here for a long time and the management have to shoulder that blame. Engineering teams need to be looked at first and an increase in quality control and engage with the teams. This is a relatively easy win and will help build the next phase.

Although the Mainline brand is long gone, many in South Yorkshire are still aware of it and may even now view this favourably. It isn't the right time to relaunch a brand for South Yorkshire, but a new, revitalised look with better presented vehicles with a local feel are all elements that can be used to relaunch the operation.

Doncaster is a captive audience, as is Rotherham, but both are major towns that are on their backside. Sheffield has Stagecoach, but that should never be a reason to roll over and have its belly tickled, quite the opposite.

The opportunity to grasp the nettle could be here and if they want to, they could make a fist of it. A base at Rotherham would look like a backward turn but in many cases wouldn't. Midland Road wasn't suitable, but there are many areas in the town that could accommodate a depot and would support the town service and take back the X78, as Rotherham is the centre point for this once flagship route.

We've seen what GNW did with Manchester, First could well do similar with SY. It isn't over by any means, but the will has to be there. The answers are there, we just need the vision and the new broom might well see the benefits outweigh the pitfalls for not much pain.

And in the short term at least, money......

 

[Robertj21a]

And in the short term at least, money......

I'm not so sure that FSY is mostly about needing money. I believe that a massive improvement could be made just by putting in a management team that genuinely care, clearly communicate, quickly evidence the sort of things that they intend to do and ensure that all good ideas from the staff are properly considered. Improve meetings with staff, go out on the streets, ride the buses, be open to fresh thinking, try to understand why things have gone wrong in the past etc

 

[cnjb8]

FSY has in recent years appeared to be very unloved and in a state of being run down rather than exploited. This isn't an operation that is going to turn round overnight and will take many months, if not years, of righting the wrongs of the past.

Morale has been an issue here for a long time and the management have to shoulder that blame. Engineering teams need to be looked at first and an increase in quality control and engage with the teams. This is a relatively easy win and will help build the next phase.

Although the Mainline brand is long gone, many in South Yorkshire are still aware of it and may even now view this favourably. It isn't the right time to relaunch a brand for South Yorkshire, but a new, revitalised look with better presented vehicles with a local feel are all elements that can be used to relaunch the operation.

Doncaster is a captive audience, as is Rotherham, but both are major towns that are on their backside. Sheffield has Stagecoach, but that should never be a reason to roll over and have its belly tickled, quite the opposite.

The opportunity to grasp the nettle could be here and if they want to, they could make a fist of it. A base at Rotherham would look like a backward turn but in many cases wouldn't. Midland Road wasn't suitable, but there are many areas in the town that could accommodate a depot and would support the town service and take back the X78, as Rotherham is the centre point for this once flagship route.

We've seen what GNW did with Manchester, First could well do similar with SY. It isn't over by any means, but the will has to be there. The answers are there, we just need the vision and the new broom might well see the benefits outweigh the pitfalls for not much pain.

Does GNW make a profit?

 

[Cesarcollie]

I'm not so sure that FSY is mostly about needing money. I believe that a massive improvement could be made just by putting in a management team that genuinely care, clearly communicate, quickly evidence the sort of things that they intend to do and ensure that all good ideas from the staff are properly considered. Improve meetings with staff, go out on the streets, ride the buses, be open to fresh thinking, try to understand why things have gone wrong in the past etc

Trust me, it will need money. Inevitably the new team will unearth problems, and whilst I agree it’s not all about money, putting right months/years of (for example) engineering neglect, will cost....!

 

[Tetchytyke]

In fairness, I think there's a few places that were good bus territory (and intuitively you would think should still be) that just aren't and not just confined to First.

True enough. It's always tough to compare different areas, but I've always considered Bradford and Sunderland to be comparable, deprived cities in the shadow of a more glamorous neighbour. And First Bradford don't come out of comparisons to Stagecoach and Go very well.

First have, for a long time now, been too quick to bin off evening services and then wonder why everything falls down. Where my parents are now saw the last bus from Halifax move from 2310 to 2240, so now when I go out boozing with dad we get a lift down and a taxi back. I doubt we're alone. Where we used to live in Bradford is even worse.

 

[Nickincornwall]

Slight restructuring put in place to ensure that First South Yorkshire doesn't fall any further down the drain than it has over recent years. First Midlands to be merged in and Nigel Eggleton to be the MD of a new First South Yorkshire & Midlands division.

Sounds more like desperation and with
no actual thought. For example Worcester would probably be nearer and more understood by first Bristol.

 

[Volvodart]

It is actually an improvement in what they have been doing at FSY in recent years. At least they now have someone experienced in running bus companies. The fleet size of his area was not large in comparison with what other First Bus MDs have to oversee.

 

[GusB]

** Mod Note **

The discussion concerning the decline or otherwise of Midland Red West has been moved to a new thread.

https://www.railforums.co.uk/threads/the-decline-of-midland-red-west.205137/

Please continue any debate there.

 

[mic]

First Greater Manchester both Oldham and Bolton Vantage fleet now showing on bus times map but not uk bus checker

 

[Volvodart]

FirstGroup plc full year results for the 12 months to 31 March 2020

See below re North American sale progress.

First Bus UK - No new diesel buses to be bought after December 2022.

In their assessment for going concern, the base case assumed that First Bus: Operated miles increase significantly with CBSSG Restart support, but that support assumed to cease in March 2021 with network miles dropping back to circa 70-80% of pre-crisis levels in FY21/22.

The UK Bus Defined Benefit Pension Deficit provided for in the accounts has gone down from £209.0 m to £145.8 m, but overall it has not changed for Firstgroup in total due to an increase in the North America Schemes deficit.

Final Results

otp.tools.investis.com

North American sale processes

Working with management and supported by independent advisers, the Board formally reviewed the various options to maximise value for all shareholders (acknowledging that a sale process for Greyhound was already underway) and formally announced in December 2019 that the Group would explore all options in respect of our North American contract businesses, First Student and First Transit, including a potential disposal. By this point preparatory work had been undertaken, in conjunction with expert third-party consultants and advisers, for a possible carve-out and sale of these businesses, and the team began designing the optimal structure for implementation and compiling the detailed materials and reports necessary for a transaction of this scale. We formally announced the commencement of the sale process in early March 2020 having been encouraged by the significant interest expressed in our North American contract businesses.

The onset of the coronavirus pandemic and all its attendant uncertainties for potential buyers and their finance providers has impacted the speed at which this process can be concluded but it remains the objective. The Board has continued to regularly review all options to deliver value from these assets and continues to believe that the sale of these businesses remains the best way to unlock material value for all FirstGroup shareholders. Clearly the state of financing markets and the availability of capital, as well as greater visibility on the pace and profile of the resumption of services, will be important factors for buyers to be able to make an informed assessment of the divisions' prospects

I believe the management, supported by the current Board, are well placed to deliver this outcome and that execution of this strategy at the right time is still the best route to enhance the long-term value of our businesses, while respecting our commitments to all our stakeholders.

Statutory	Mar 2020 £m​	Mar 2019 £m​	​	​
Revenue	7,754.6​	7,126.9​	​	​
Operating (loss)/profit	(152.7)​	9.8​	​	​
Loss before tax	(299.6)​	(97.9)​	​	​
EPS	(27.0)p​	(5.5)p​	​	​
Net debt4	3,278.1​	903.4​	​	​

Year to 31 March 2020​	Year to 31 March 2019​
Revenue £m​	Adjusted operating profit1 £m​	Adjusted operating margin1 %​	Revenue £m​	Adjusted operating profit1 £m​	Adjusted operating margin1 %​
First Student	1.940.4​	158.8​	8.2​	1,845.9​	171.2​	9.3​
First Transit	1,171.4​	28.3​	2.4​	1,075.8​	49.3​	4.6​
Greyhound	603.2​	(11.6)​	(1.9)​	645.1​	2.6​	0.4​
First Bus	835.9​	46.1​	5.5​	876.1​	65.1​	7.4​
Group items2	17.8​	(33.7)​	​	17.3​	(42.2)​	​
Road divisions	4,568.7​	187.9​	4.1​	4,460.2​	246.0​	5.5​
First Rail	3,185.9​	68.9​	2.2​	2,666.7​	68.8​	2.6​
Total Group	7,754.6​	256.8​	3.3​	7,126.9​	314.8​	4.4​
North America in USD​	$m​	$m​	%​	$m​	$m​	%​
First Student	2,474.9​	205.9​	8.3​	2,424.9​	227.1​	9.4​
First Transit	1,488.3​	36.2​	2.4​	1,411.4​	64.8​	4.6​
Greyhound	766.0​	(15.3)​	(2.0)​	846.7​	2.7​	0.3​
Total North America	4,729.3​	226.8​	4.8​	4,683.0​	294.6​	6.3​

Divisional summary

• First Student: strong contract retention through excellent customer service, positive pricing and
acquisitions underpin market leadership position; despite cost headwinds well positioned to restart at the
appropriate time for each of our schools with conversations underway about how and when that will be
• First Transit: positive pricing, new contracts, and cost actions only partially offset a number of cost
headwinds during the year. Pace of restoration of service will vary by business line but starting to see
increases in activity being directed by our transit authority customers
• Greyhound: Coronavirus compounded a challenging year with lower immigration-related demand,
competition and lower fuel prices resulting in like-for-like7
revenue reductions of (5.3)% and an adjusted1
operating loss in the year; government grants for our national network provide a framework from which to
build back up our timetables as passenger demand justifies
• First Bus: like-for-like7 passenger revenue +0.7% reflects the previously reported poor weather in H1 and
the coronavirus outbreak. Fuel and other inflationary pressures during the year were partially offset by initial
benefits of cost efficiency programme; new government ‘Restart’ grants in place to enable increased service
capacity while maintaining social distancing
• First Rail: like-for-like7 passenger revenue +0.2%. Strong GWR performance and successful start-up of
the West Coast Partnership’s new Avanti franchise were offset by previously reported challenges in TPE
and SWR. Secured GWR contract from April 2020 until at least 2023. All franchises underpinned by
Emergency Measures Agreements with UK government until at least September

 

[David Verity]

FirstGroup plc full year results for the 12 months to 31 March 2020

See below re North American sale progress.

First Bus UK - No new diesel buses to be bought after December 2022.

In their assessment for going concern, the base case assumed that First Bus: Operated miles increase significantly with CBSSG Restart support, but that support assumed to cease in March 2021 with network miles dropping back to circa 70-80% of pre-crisis levels in FY21/22.

The UK Bus Defined Benefit Pension Deficit has gone down from £209.0 m to £145.8 m, but overall it has not changed for Firstgroup in total due to an increase in the North America Schemes deficit.

Final Results

otp.tools.investis.com

Apologies if there are still any Lockhead admirers out there but it seems that the harvest he planted is now coming back to engulf customers. staff, managers and investors.

 

[overthewater]

So first will end its days as a UK bus operation only?

 

[winston270twm]

Apologies if there are still any Lockhead admirers out there but it seems that the harvest he planted is now coming back to engulf customers. staff, managers and investors.

You'll do well to find any Lockhead admirers....

 

[overthewater]

You'll do well to find any Lockhead admirers....

They is deffo one on this forum.

 

[richw]

So first will end its days as a UK bus operation only?

U.K. bus and rail Based on that report is where they are aligning focus (both turned profit)

 

[TheGrandWazoo]

You'll do well to find any Lockhead admirers....

There was one....

I have nothing but praise for Sir Moir Lockhead and the vision he had for FirstGroup at a corporate level however in hindsight some decisions were better than others in respect of First Midland Red.

Of course, there is a difference between vision and execution

 

[winston270twm]

There was one....

Ah! He doesn't count.....

Tbf in the early days under Moir, First Group were well ahead on all the others in the late 199's / early 2000's with their offering. It went tits up for Moir when he embarked on expansion at any cost.

 

[TheGrandWazoo]

Ah! He doesn't count.....

Tbf in the early days under Moir, First Group were well ahead on all the others in the late 199's / early 2000's with their offering. It went tits up for Moir when he embarked of expansion at any cost.

How dare you that... a former employee of First (but he can't say when for professional reasons)

Some of the early moves by First were actually really positive but as you say, there was a hubristic rush to buy up firms and some prices paid were massively inflated. That meant that insufficient funds were invested into the core bus business and to service those loans meant not just a reduction in investment but also above inflation fare increases and cuts to services etc that didn't meet unrealistic margin expectations. And that is all before the calamitous Laidlaw purchase.

I remember moving to Manchester in the late 1990s and the difference was massive between the two former halves of GM Buses. Stagecoach had a raft of perhaps more basic vehicles in Olympians, Volvo B10M/PS, etc with a number of older GM Olympians, Metrobuses and Dominators with Atlanteans confined to Magic Bus work. Meanwhile, getting a First vehicle meant you could have lovely new B10BLE or Dart but all too often, it would be a tomato soup livery Atlantean. Good for the enthusiast but not the average passenger.

 

[overthewater]

FirstGroup could cease trading as coronavirus hits passenger levels

Rail and bus operator warns its future is in doubt after reporting loss of almost £300m

www.theguardian.com

That not what is sounded like from the report postaged above?

FirstGroup, the UK’s largest bus company and operator of rail franchises including Avanti West Coast and Great Western Railway, has admitted it may not be able to continue trading because of the impact of the coronavirus on its business.

The company said on Tuesday there was “a material uncertainty” that may cast significant doubt on its continuing ability to operate, as it reported losses of just under £300m for the year to the end of March.

FirstGroup’s chief executive, Matthew Gregory, said: “Despite the near-term uncertainty, the long-term fundamentals of our businesses remain sound.”

However, FirstGroup was the biggest faller in the FTSE 250 on Tuesday in early trading, with shares down about 16% by midday in London. The company’s share price has declined by more than two-thirds since February.

Since the coronavirus lockdown began in March, passenger numbers have plunged across its rail and bus divisions, which are now relying on state support to continue, and FirstGroup has not yet been able to sell off its troubled US bus operations as planned.

The transport operator said that while emergency subsidies had kept its operations viable, there was “material uncertainty as to the continuation of these measures” and “no way to predict” how coronavirus would leave its passenger transport services.

It warned that should the crisis persist, there were doubts over “the extent to which governments and customers will continue to have the ability to provide fiscal and contractual support”, and the cumulative risks meant that “a material uncertainty exists that may cast significant doubt on the group’s and the company’s ability to continue as a going concern”.

FirstGroup retains an £850m cash buffer to help it weather the uncertainty, including a £300m loan from the Bank of England’s Covid-19 corporate financing facility.

In the UK, First has shared in additional government funding of £3.5bn to rail operators and £400m to bus firms, shielding them from lost revenue.

The firm said its Great Western and new Avanti West Coast franchises had performed strongly last year – if not the TransPennine and SouthWestern services, whose collapse had been widely anticipated before franchises were suspended in March.

The reported £294.6m losses came despite a 9% leap in revenue in the 12 months to March 2020, before the start of the pandemic, with writedowns due to issues with insurance in North America and losses on its Greyhound intercity coach service in the US.

First said March was “traditionally a strong trading period for the group”, but passenger numbers across all operations were down 90% by the end of that month, with North American schools served by its First Student service closed due to the pandemic.

First still aims to offload all its US bus operations but has yet to find a buyer, having finally put them up for sale in March just as the impact of coronavirus was becoming apparent.

Gregory said: “The funding and support we have received from governments and our customers to sustain critical transport services is testament to their importance now and for the future.

“There is no way of predicting with any certainty how the coronavirus pandemic will continue to affect the public transportation sector and the impact it may have on customer trends longer-term. However, as leading operators in each of our markets we are strongly positioned for a recovery in passenger demand and for the opportunities that may emerge from this exceptional period.”

Gregory said the group remained “resolutely committed” to selling off its North American divisions at the earliest opportunity, which include also First Transit, its scheduled urban bus division.

Some City analysts said they still backed the group despite disappointing results and significant challenges ahead. Gerald Khoo, of Liberum, said that the coronavirus impact had come earlier than anticipated and “the results fall well short of expectations”.

Khoo added: “Support from governments and customers has been crucial to allowing the group to remain cash generative. We expect this support to continue, but any wavering of such support is a key risk. We still see clear value, but the challenges are understandably more prominent.”

 

[Baxenden Bank]

The talk of mileage being reduced to 80% of the pre-covid level after things settle down (post March 2021) does not fill me with joy. Senior management appear to have given up, having no confidence in their ability to recoup recent passenger losses, never mind growing the market.

 

[carlberry]

The talk of mileage being reduced to 80% of the pre-covid level after things settle down (post March 2021) does not fill me with joy. Senior management appear to have given up, having no confidence in their ability to recoup recent passenger losses, never mind growing the market.

I don't know what you expect them to report, it has to be realistic.

We've just had 3 months of the government telling everybody to avoid public transport because it's dirty and it can kill you, every office based company in the country has been through a 3 months learning curve on how to work with some/all of it's employees outside the office and lots of people have just been introduced to online shopping/ordering for the first time. Every bus is operating at 25% capacity for an indeterminate time and the rail division has been renationalised in the short term with an uncertain future and lots of people wanting it renationalised permanently.

I'd say anybody who's given themselves a target of 80% within less than a year is being an optimist, without the government is going to pay for empty buses ad infinitum!

 

[freetoview33]

The talk of mileage being reduced to 80% of the pre-covid level after things settle down (post March 2021) does not fill me with joy. Senior management appear to have given up, having no confidence in their ability to recoup recent passenger losses, never mind growing the market.

I think we could see the exit from some areas of UK bus, with any investment focused on areas that are strong.

 

[Robertj21a]

The talk of mileage being reduced to 80% of the pre-covid level after things settle down (post March 2021) does not fill me with joy. Senior management appear to have given up, having no confidence in their ability to recoup recent passenger losses, never mind growing the market.

It's very rare but for once I probably agree with First. It's going to be quite a challenge to get back up to 80% in just a few months

 

[overthewater]

I think we could see the exit from some areas of UK bus, with any investment focused on areas that are strong.

Welcome to 2012. It's a never ending Merry go round.

 

[Baxenden Bank]

I don't know what you expect them to report, it has to be realistic.

We've just had 3 months of the government telling everybody to avoid public transport because it's dirty and it can kill you, every office based company in the country has been through a 3 months learning curve on how to work with some/all of it's employees outside the office and lots of people have just been introduced to online shopping/ordering for the first time. Every bus is operating at 25% capacity for an indeterminate time and the rail division has been renationalised in the short term with an uncertain future and lots of people wanting it renationalised permanently.

I'd say anybody who's given themselves a target of 80% within less than a year is being an optimist, without the government is going to pay for empty buses ad infinitum!

I expect them to come out fighting.

Clearly they have to speak the truth to the stock exchange in terms of impact on the business going forwards.

However, as I understand it, the government has offered support to top up revenue to normal levels, ENCTS money has been paid regardless of wrinklies not actually travelling yet my local operator had well under 1/3 of it's buses on the road for a good while. Kerching! Unless I've missed something vital.

The cut in capacity to 25% is baloney, chosen by the operator for whatever reason - to make worried people feel safe to use the bus seems to be the general aim. Rosso (Transdev) has removed it's artificial capacity limits. Perhaps a business with it's eye on the future rather than it's eye on public support forevermore.

 

[Volvodart]

It's very rare but for once I probably agree with First. It's going to be quite a challenge to get back up to 80% in just a few months

It was actually by 31 March 2022.

 

[winston270twm]

How dare you that... a former employee of First (but he can't say when for professional reasons)

Some of the early moves by First were actually really positive but as you say, there was a hubristic rush to buy up firms and some prices paid were massively inflated. That meant that insufficient funds were invested into the core bus business and to service those loans meant not just a reduction in investment but also above inflation fare increases and cuts to services etc that didn't meet unrealistic margin expectations. And that is all before the calamitous Laidlaw purchase.

I remember moving to Manchester in the late 1990s and the difference was massive between the two former halves of GM Buses. Stagecoach had a raft of perhaps more basic vehicles in Olympians, Volvo B10M/PS, etc with a number of older GM Olympians, Metrobuses and Dominators with Atlanteans confined to Magic Bus work. Meanwhile, getting a First vehicle meant you could have lovely new B10BLE or Dart but all too often, it would be a tomato soup livery Atlantean. Good for the enthusiast but not the average passenger.

First would have been much better during his era at FMR.

Unfortunately, in the latter years Moir was simply far too focused on simply being the biggest & lost his focus & control of the group. 13 years on, the group is still strangled & plagued by his poor decisions.