Monday, 19 March 2012

First Group Sell London Bus Depot

FirstGroup has sold its 130-vehicle Northumberland Park depot in north-east London.

The depot's 130 buses, 13 routes and around 400 staff will transfer to the North East-based Go Ahead.

Experts reckon that the sale should really suit Go-Ahead, whose bus operations are concentrated in London and the south-east and who should be able to use the depot to help it to increase its operating margins.

It makes economic sense to First Group, too. The £14m sale to Go-Ahead Group will go some way to meeting the £100m-£115m cash target FirstGroup has set itself for the current financial year.

However, things aren't gig as quickly as the company would like. Frst Group is concerned that regulatory concerns are slowing its disposal programme after last week's deal to sell its bus operations in north Devon to Stagecoach for £2.8m was only completed pending the approval of the Office of Fair Trading. The company reckons that previously a deal that size would probably never have come under such close scrutiny.

First Group are clearly working hard to reduce its eye-wateringly large debt of around £2bn which it built up after a series of acquisitions such as the takeover of Greyhound buses in the US. Industry insiders reckon that the company is trying to make itself more attractive in time for the next round of rail franchises after the government stated that it will be looking for companies to take longer contracts and who will therefore need to show that they can withstand difficult years.

FirstGroup currently operates the Great Western, TransPennine Express, Capital Connect and Hull train lines as well as ScotRail.

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