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Megabus Europe

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enrag2000

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Stagecoach Group PLC

Sale of megabus Europe retail operations

29 June 2016

Stagecoach Group plc ("Stagecoach") is pleased to announce that yesterday it agreed the sale of the retail operations of its megabus Europe business to FlixMobility GmbH ("FlixBus"). Only those megabus.com retailing operations involving mainland Europe are part of the agreed sale.

The megabus Europe business comprises both retailing activities and coach operating activities. The retailing activities involve the design of inter-city coach services, including their timetabling, co-ordination and marketing, as well as the pricing and sale of journeys on those services. The coach operating activities encompass the day-to-day operation and staffing of the coach services. We have agreed the sale to FlixBus of the retailing part of that business. We will continue to operate a number of European inter-city coach services as a contractor to FlixBus and we look forward to building on our relationship with it.

The sale of the megabus Europe retail operations will complete on or around 1 July 2016. In addition, Stagecoach has agreed that it will dispose of a number of vehicles to FlixBus or its nominee at a future date.

The agreed amount of the consideration for the sale of the retail operations will be satisfied by the issue of a loan note from FlixBus to Stagecoach at completion. Stagecoach expects the loan note to be fully settled by the end of 2017. Payment of the loan note is not subject to any conditions or performance criteria which need to be fulfilled.

Stagecoach expects to report a gain on disposal in respect of the sale in its consolidated financial statements for the year ending 30 April 2017.

Existing customer bookings for megabus.com Europe journeys remain valid and these services are continuing to operate as normal. FlixBus is a leading retailer of inter-city coach travel in Europe - more information on it can be found, and travel can be booked, at www.flixbus.com.
 
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WestCoast

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Now that's something I definitely didn't expect either! Although in my experience of the Megabus Germany operations, the loadings were not especially great. I don't think the market reacted that well to the budget offering. So neither National Express nor Stagecoach succeeded!
 

TheGrandWazoo

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Nor I...that's a rather un-Souter admission of defeat!


Sent from my iPad using Tapatalk

Why is it an admission of defeat?

It may be that they've been offered a healthy premium on their perception of the value of the business and so it makes sense to sell.

They done that before with the London ops that Macquarie paid a daft sum for! There have been other examples. The sale of Stagecoach Portugal gave them a £6m profit when annual profits were only £1.1m

More likely to be a pragmatic move more than anything else
 

overthewater

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Stagecoach will still be operating services in the mainland just there want be asking for the customers directly ?
 

TheGrandWazoo

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Stagecoach will still be operating services in the mainland just there want be asking for the customers directly ?

That's how I read "The retailing activities involve the design of inter-city coach services, including their timetabling, co-ordination and marketing, as well as the pricing and sale of journeys on those services. The coach operating activities encompass the day-to-day operation and staffing of the coach services. We have agreed the sale to FlixBus of the retailing part of that business."
 

freetoview33

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But then again

In addition, Stagecoach has agreed that it will dispose of a number of vehicles to FlixBus or its nominee at a future date.

So that sounds like they are getting rid of some of the Coach operating activities too!
 

WestCoast

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So, for the moment at least, megabus will become an operator for Flixbus. That would make sense as Flixbus doesn't actually operate any vehicles in any country, it's all done through the 100+ contractors.
 

radamfi

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If you try to book the (ex-)megabus routes from the continent to London using the Flixbus site, it says "Operated by "Megabus" Midland Red (South) Ltd." The same journeys are still bookable through the megabus site but with different fares, so it is wise to check both sites before booking.
 
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dmncf

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I guess there were too many operators in the western European international coach market, and it made more sense for Stagecoach to sell their Megabus Europe operation and have it absorbed into the FlixBus brand, rather than continuing to lose money competing.

How do we think Eurolines are faring in all this competition?
 

overthewater

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How many operators are there in this new Western eu market? Also how is Brian souters polish operation going?
 

TRAX

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France has 3



Eurolines/Isilines (Transdev)

FlixBus

Ouibus (SNCF)



We used to have two more which were Starshipper (absorbed by Ouibus) and Megabus (bought by FlixBus)
 

overthewater

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Im starting to wonder if there is more to this deal than meets the eye? Flixbus is high tech company run by newbies, Ie there have alot of back office Technological advance people, while Stagecoach are old hats who have advance knowledge of deregulated markets. Both parties have something the other one needs.

Maybe just maybe Stagecoach staff might be helping out Flixbus on how to get the best from this new market conditions while megabus get the new high tech advances it baldy needs to get?
 

Deerfold

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They could get the power sockets on their buses working. I've a hit rate of 1 in my last 6 buses actually having power to the sockets, with my last 4 NX coaches all having working power.
 

Bungle965

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They could get the power sockets on their buses working. I've a hit rate of 1 in my last 6 buses actually having power to the sockets, with my last 4 NX coaches all having working power.

That is intresting because out of the 5 coaches that I have used with Megabus, all but one had power sockets working.
Sam
 

radamfi

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In an interview a couple of years ago, Souter openly admitted that Stagecoach were behind the times technologically compared to the then German upstarts. From the passenger point of view, Flixbus have an app where tickets can be bought and changed up to 15 minutes before departure. Flixbus probably have a lot of background processes that are advanced compared to Megabus.
 

overthewater

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In an interview a couple of years ago, Souter openly admitted that Stagecoach were behind the times technologically compared to the then German upstarts. From the passenger point of view, Flixbus have an app where tickets can be bought and changed up to 15 minutes before departure. Flixbus probably have a lot of background processes that are advanced compared to Megabus.

This is why I think there more to this deal than meets the eye. Remember the people who created Flixbus are not bus people. win win for both parties.
 

TheGrandWazoo

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This is why I think there more to this deal than meets the eye. Remember the people who created Flixbus are not bus people. win win for both parties.

I think you're barking up the wrong tree in terms of the "win/win" - Buses magazine makes mention of the massive losses that Megabus was racking up.

Similarly, news from Deutsche Post:

"German postal and logistics company Deutsche Post DHL Group is selling its long-distance bus unit, Postbus, to market leader Flixbus due to tough competition, it said on Wednesday.

Germany liberalised the long-distance bus market in 2013, prompting a flood of entrants onto the market including the bright-yellow Postbus, but also quickly leading to cut-throat price competition, insolvencies and consolidation.

Chief Financial Officer Larry Rosen said the Postbus strategy of offering more comfort and amenities such as WiFi had not worked in a market that boiled down to the cheapest ticket prices.

"We couldn't cover the costs of this premium strategy, and that's why it wasn't financially attractive," he told journalists after the group reported record second-quarter results on Wednesday.

Its shares were up 2.6 percent at 1048 GMT, the biggest gainer among leading German companies.

Deutsche Bahn's profits at its rail passenger unit has also been hit by the competition from buses. It is the third-largest long-distance bus operator in Germany behind Postbus but CEO Ruediger Grube said last month Deutsche Bahn would review its bus strategy, because the market was "nonsense" and operators were just burning money.

Flixbus has been leading consolidation in the market for long-distance bus travel, both in Germany and abroad, and had a 67 percent share of the German market in 2015.

"You can make money in the current environment, you just have to ensure the buses are full enough," Flixbus founder and Managing Director Andre Schwaemmlein told Reuters, saying the company aimed to be profitable this year in Germany.

Flixbus merged with local rival MeinFernbus just over 18 months ago, with U.S.-based private equity firm General Atlantic taking a stake in the merged group.

At the end of June, Flixbus bought the continental European operations of UK-based Stagecoach's Megabus."


In short, too much competition and too many people losing money, hence consolidation in the market.
 

Class 33

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Ah no more bargain trips to Amsterdam, Cologne, etc for a couple of quid return anymore then! :(
 

Quakkerillo

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Booked on a 15 euro trip to London now from Brussels. Before, with Megabus, I never had to pay more than 12. Let's just see what's changed for the rest!
 

Class 33

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I was lucky enough to get a number of £1 single journeys to and from the continent with Megabus. The way it worked was there only ONE £1 fare per coach, then the fares after that were something like £12, £15, £17.50, £25, up to about £35. Now that it's gone over to FlixBus though, the cheapest advance fares for Amsterdam and Cologne appears to be £19 single. And the cheapest fares between London and Brussels appears to be £11.50 single. Still good value and not to be sniffed at really, considering the distance. But unfortunately gone are the days of being able to grab those amazingly bargain priced £1 single fares! It was good whilst it lasted anyway.
 
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