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First quits London bus business

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FirstBus is pulling out of London. In deals worth almost £80million it has agreed to sell its 500-bus business in West London to Metroline, while its 400-vehicle operation in East London goes to a newcomer to the UK bus market, Australian company Transit Systems. Both sales are subject to regulatory approvals, including approval from Transport for London.

Giles Fearnley, First’s managing director UK Bus, explains: “The sale of these operations marks further progress in our programme to reposition our UK Bus portfolio, recover performance and equip the business to achieve sustainable revenue and patronage growth. Our strategy is to focus on those areas of the country which offer the greatest potential and while we have been a key operator in London for many years, our focus going forward is on the deregulated market outside of the capital."

Metroline, which is owned by Singapore-based ComfortDelGro, will take on First's depots at Alperton, Greenford, Hayes, Uxbridge and Willesden Junction, along with 494 vehicles and approximately 1,700 employees. The deal is worth £57.5million. Metroline currently runs 1,200 buses in London.

The depots at Atlas Road, Lea Interchange and Westbourne Park, along with some 400 vehicles and 1,500 employees, are being sold to Transit Systems Group for £21.3million and will be operated as Tower Transit. Transit Systems runs  700 buses on contracted services in the Australian cities of Perth and Adelaide, and starts a 200-bus contract in Sydney in October.

Transit chief executive officer, Clint Feuerherdt , says: “We are excited to start operating in London as part of the Transport for London network and build on our Australian success. We’ll be taking best practice from all of our operating contracts, working successfully with government and private companies, to ensure the transition is smooth and our service to passengers and Transport for London exceeds expectations."

Twelve months ago First sold its 130-bus Northumberland Park operation in London to Go-Ahead for £14million. Since then it has pulled out of Barnstaple, cut back in East Lothian, and sold its Wigan business to Stagecoach and its Worcester operations to Rotala.

The group's withdrawal from London coincides with a pre-close trading update for the year to 31 March which notes: “We are working through our comprehensive plan to recover performance and equip our UK Bus business to achieve sustainable revenue and patronage growth, and are seeing early positive signs in some of our markets.” During the last year like-for-like bus passenger revenue increased by 2.4 per cent, and First is forecasting a full-year operating margin of around 8 per cent.

www.firstgroup.com

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