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First Group: General Discussion

tbtc

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I don't believe Stagecoach would be allowed to have all the depots, it would mean from the Top of Scotland - Central belt is all stagecoach. Bar Dundee, covering largest area in the UK.

A large area, but with what actual population? (not including Aberdeen or Dundee or Edinburgh or Glasgow where there is another operator dominating services)

In comparison, First had a monopoly on an area from Dumbarton to South Queensferry - it may be smaller but had a big population
 
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DunsBus

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I would echo this sentiment. My head hurts every time I come back to this thread. :(

I think what may happen is that the staff affected will be told today but no public announcement will be made until the start of next week. IIRC the announcement of the closure of Dalkeith and the downsizing of Musselburgh was made on a Monday.
 

DunsBus

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Nothing has been reported on either Scotlandbus or SEScotbus newsgroups regarding any announcement from First regarding the Scotland East operation so I think it's safe to assume that we won't be hearing anything about it today.
 

KendalKing

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There was a good indication in last weeks Coach & Bus Week as to why First Group sold Wigan to Stagecoach, in an interview with its chief executive, Wigan wasn't losing money and had the margins it wanted, however the fleet age was too high and in order to replace the fleet with modern stock which appears to be what they wanted to do would have required the Margins dropping so it was either just profitable or unprofitable. It was unique amongst the depots First Group is selling and thats the only reason why it was sold.
 

tbtc

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There was a good indication in last weeks Coach & Bus Week as to why First Group sold Wigan to Stagecoach, in an interview with its chief executive, Wigan wasn't losing money and had the margins it wanted, however the fleet age was too high and in order to replace the fleet with modern stock which appears to be what they wanted to do would have required the Margins dropping so it was either just profitable or unprofitable. It was unique amongst the depots First Group is selling and thats the only reason why it was sold.

Interesting.

It does back up the view that First have used an ageing fleet to keep profit margins up (which you can get away with in the short term, but eventually comes back to bite you).

Makes me wonder how Stagecoach (which is also subject to shareholders on the Stock Market etc) is able to replace/ upgrade the Wigan fleet and make sufficient profit to keep their owners happy.
 

mbonwick

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Stagecoach run on a different business model to first. I'm not sure of the details, but the only way First can make their numbers work is by having an aging fleet, while Stagecoach look more at the passenger experience and can justify a newer fleet.

Remember also that a couple of years back Wigan lost newer B10BLEs and Scanias to First Aberdeen which were replaced with the knackered stuff currently there, so its not all about the aging fleet propping the margins up.
 

bb21

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I am putting my head on the line saying this, however according to contacts,

First Scotland East

£1m profit up to March 2011
£3m operating loss alone up to March 2012

A bit of a dramatic turn of events.
 

winston270twm

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I think what may happen is that the staff affected will be told today but no public announcement will be made until the start of next week. IIRC the announcement of the closure of Dalkeith and the downsizing of Musselburgh was made on a Monday.

The majority of company announcements regarding takeover / disposals etc normally happen on a Monday, that said it can be announced at anytime the markets are open also.
 

tbtc

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Stagecoach run on a different business model to first. I'm not sure of the details, but the only way First can make their numbers work is by having an aging fleet, while Stagecoach look more at the passenger experience and can justify a newer fleet.

Remember also that a couple of years back Wigan lost newer B10BLEs and Scanias to First Aberdeen which were replaced with the knackered stuff currently there, so its not all about the aging fleet propping the margins up.

Fair points. Stagecoach seem to have a much better business model (one reason why they aren't having the problems that First currently are)
 

Lewisham2221

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Interesting.

It does back up the view that First have used an ageing fleet to keep profit margins up (which you can get away with in the short term, but eventually comes back to bite you).


Didn't Arriva do the same thing in Derby, until the time came that they couldn't really get away without upgrading the fleet any longer?
 

WatcherZero

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Interesting.

It does back up the view that First have used an ageing fleet to keep profit margins up (which you can get away with in the short term, but eventually comes back to bite you).

Makes me wonder how Stagecoach (which is also subject to shareholders on the Stock Market etc) is able to replace/ upgrade the Wigan fleet and make sufficient profit to keep their owners happy.

Stagecoach lowered the fares quite significantly in Wigan too which leads me to believe they use a different assumed supply/demand price formula.
 

MCW

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There was a good indication in last weeks Coach & Bus Week as to why First Group sold Wigan to Stagecoach, in an interview with its chief executive, Wigan wasn't losing money and had the margins it wanted, however the fleet age was too high and in order to replace the fleet with modern stock which appears to be what they wanted to do would have required the Margins dropping so it was either just profitable or unprofitable. It was unique amongst the depots First Group is selling and thats the only reason why it was sold.

this in itself is interesting.

so perhaps Northampton is another example?? perhaps they are doing better than we all seem to think, they have an ageing fleet etc.

Stagecoach lowered the fares quite significantly in Wigan too which leads me to believe they use a different assumed supply/demand price formula.

which also indicates that first were being greedy, much like they are in leicester with the latest round of fare rises going up due to 'rising operational costs' which I claim is Bovine substance. If that was the case then Arriva, Leicester's biggest operator, whould have put all of their fares up as well.
 

Volvodart

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I am putting my head on the line saying this, however according to contacts,

First Scotland East

£1m profit up to March 2011
£3m operating loss alone up to March 2012

A bit of a dramatic turn of events.

First said that they had lost around £5 million at Dalkeith in the last 3 years (unsure if this was evenly spread out though).
 

DunsBus

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"Prismascotland" over on Scotlandbus has posted this useful insight into the situation at First. This includes a useful pointer as to what's staying and what's going, as PS says: "those depots safe are the ones where new buses, cascades and repaints were signed off for so there are plenty of clues about what is safe and what isn't." I think it's safe to assume that Gala is amongst the depots First are keeping given the recent delivery of the new E300s, vehicles based there now starting to be repainted into the new livery and the recent Scania/Gemini swap to bolster the low-floor double-deck availability for service 62.

"The financial situation at parent FirstGroup has everything to do with it.

The first act of Tim O'Toole on taking over as CEO was to renegotiate the groups
debt to avoid becoming the next Comet or HMV.

With the debt payments agreed a review of each First UK Bus depot was conducted
looking at the ability of each depot to support group debt repayments from its
profit while at the same time leaving sufficient funds to cover the depots
capital investment. An old depot requiring replacement, a depot with an old
fleet profile or a stand alone depot with high costs/low margins was at a
disadvantage.

Where a depot was unable to facilitate debt repayment and capital investment
there are plans to merge with another depot to make more profitable, sell or
failing to secure a buyer close.

The disposal plan was signed off last year and those depots safe are the ones
where new buses, cascades and repaints were signed off for so there are plenty
of clues about what is safe and what isn't.

The disposal plan is broken into stages so there is a final set of depots that
will only have their fate finalised once the initial sales progress or not as
the case has been in some instances.

The West Coast rail set back will indeed mean a re-evaluation of strategy but
not necessarily with UK Bus."
 

radamfi

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I think First Group becoming 'the next Comet or HMV' is a bit of an exaggeration. At the very worst, First could just offload some of their major bus operations such as Greater Manchester or Glasgow, American school buses, or US Greyhound to pay off the debt.
 

overthewater

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Be left with what?

First needs to get rid of all operations which it can't get an profit from, ie the areas which have seen any investment nor love.

This has been first group problem, its like a small kid, saying it's mine and not sharing .
 

radamfi

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Of course, it is preferable for FirstGroup to hang on to their big assets. But if the worst should happen, they have plenty of profitable businesses that they can sell to avoid going bust. It is highly unlikely for things to get to that stage. First would probably be taken over long before then. FirstGroup is actually quite an attractive proposition for investors if you look at the low P/E ratio and high dividend. If they can get debt down to a manageable level they should be fine.
 

overthewater

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It seems to be getting rather unlikely again there be any announcement this week. I wonder how ended up in such a frenzy.

Of course Next week chip papers claim a company in the midlands are in trouble ( Omnibus blog) and it seems talk about now moved on to the South west of England.
 
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