winston270twm
Established Member
- Joined
- 26 Oct 2012
- Messages
- 1,899
Leicester now has one of the highest profit margins in UK bus. Its fleet is not in need of replacing imminently. First Aberdeen has about 60% of its fleet of the age of Leicester's oldest buses and they are getting replaced over the next 4 years. If it does get sold it will be interesting to see how First explain it.
Leicester may have one of the highest profit margins in UK bus, however, as its only a small standalone operation i.e. equivalent to only one garage of First London, West/South Yorkshire, Manchester, Glasgow etc, in terms of the profit it contributes to group in £Millions it will still be a relatively small amount (I would guess £2.5-3 million max), with limited opportunities to squeeze any significant extra out of the operation. For Leicester to contribute an additional £1 million pound profit to group, its margin may need to increase by 8-10%, where as one of the big former PTE operations the margin would only to grow by 0.5-1%. First would achieve the highest profit growth by focusing on margins at the big operations.
As I've said before Leicester would attract a high sale price / plenty of interest with high profit margins, First would go a long way towards achieving the £100 million in disposals yet only be sacrificing a profitable operation the size of Wigan in the process. First needs to accept that they can't sell off all the loss making / low margin operations, as they will not have a hope in hell of raising the £100 million in disposal proceeds, based of sale prices agreed to date