Rail demand lifts Go-Ahead profits

Transport group Go-Ahead has said it will make better-than-expected half-year profits as more passengers use its train services.

But the company remains cautious for the next six months, despite pushing through inflation-busting price hikes in January.

The firm said revenues at Southeastern and Southern were up by 6% and at London Midland by 7% in the second half of 2010. It now expects first half operating profits to be in line with the same period last year when it made £19.9 million, whereas it had previously forecast a drop in profits in the period.

Go-Ahead said the improvement reflected the performance of its rail division, largely due to procurement savings.

Rail providers across the UK are putting prices up by an average of 6.2% in January as part of the Government’s plans to invest in the network. Some fares at Southeastern are going up by as much as 12.8%. The firm, which runs its rail services in a joint-venture with French company Keolis, said passenger numbers were up 4% at Southern and London Midland.

The Government allowed train operating companies to raise regulated fares, which include season tickets, in 2011 by 5.8% – one percentage point above retail price inflation of 4.8%. Southeastern was allowed to raise its prices by 7.8%, or three percentage points above the inflation rate.

Its bus division, which operates services including Metrobus in Sussex, Plymouth Citybus and Oxford Bus Company, also put in a solid performance and should make better operating profits than last year.

The company’s deregulated bus operations saw revenues and passenger numbers increase by between 3% and 4% in the period. Its regulated London bus operation performed in line with expectations, with revenues 7% below last year due to changes in incentive-based contracts.

Despite the strong performance in the second half of 2010, Go-Ahead remained cautious in its outlook. It said: “Our operations are proving resilient with continued passenger growth across our bus and rail operations. However, we continue to anticipate challenging economic conditions in the near-term and therefore believe it is prudent to maintain our full-year expectations as previously reported.”

Its rail business remains difficult to forecast but it said all three divisions will be in profit in the first half of 2011.