First Group: General Discussion

[winston270twm]

How much could UK bus make? either as single company or chopping everything up? Aircoach, im not sure the rails contracts can be transferred? Then there open market East Coast trains, could that make some money?

How longs a piece of string..... too many factors to consider. Rail contracts can be transferred, NX sold c2c to Trenitalia recently, which is what was left of Prism Rail that NX themselves acquired.

 

[overthewater]

Surly there is book value of UK bus?

 

[DD12]

I don't think anyone has mentioned the "lowest-cost" operators/ smaller groups as possible candidates for (ultimately) taking-over First UK bus companies (?) --

As an example, where I live -- Worcester -- the most likely candidate would be the Rotala group, (which I would hate).

The city and county councils might also "hate" that idea (due to reported/ apparent reliability issues)
(??) -- but would they have any power or say in the matter ?

 

[Cesarcollie]

I don't think anyone has mentioned the "lowest-cost" operators/ smaller groups as possible candidates for (ultimately) taking-over First UK bus companies (?) --

As an example, where I live -- Worcester -- the most likely candidate would be the Rotala group, (which I would hate).

The city and county councils might also "hate" that idea (due to reported/ apparent reliability issues)
(??) -- but would they have any power or say in the matter ?

The dilemma is that, as has been pointed out, there would be completion issues in many areas with the 'big five' buying bits of First UK Bus. Equally, the economic state of much of the industry at present will probably mean most of the groups have little enthusiasm for buying further problems, unless there are particular strategic or good 'fits' (though of course these are the most likely to give rise to competition concerns).

The independent sector in many cases has neither the cash nor expertise to take on a chunk of First, and the 'medium size' groups and those independents with capability would only be able to cope with a very limited level of acquisition - both in terms of affordability and the management resource to sort out the problems. Whether these problems are caused by local economic conditions, or historic bad management in the Blockhead era, they take a very long time to sort out. Passengers who have deserted do not return quickly, whatever a new owner might do.

And of course in some of the PTE areas, the threat of franchising means the number of likely buyers will be at best very limited - anyone who does so will effectively value the business as assets (at best).

Add to this the inherited working practices, wage rates, pension liabilities (which may or may not be transferred) etc and in many cases it would be better to start with a clean sheet.

In summary, I think the outlook for First UK bus is largely (at best) sales at or around NAV, or in other instances, closure. A sad state of affairs.

 

[Jordan Adam]

Nor 'Solent' - Portsmouth, Fareham & Gosport (right next door to the quoted example of Southampton). There is both a comprehensive network and a near monopoly.

Indeed. The fleet size for Scotland East and Glasgow alone are well over the 1K mark. Aberdeen is somewhat isolated but it has a comprehensive network and preforms well.

Personally i do think if the 3 Scottish divisions were to split and become their own company they'd do very well and find it easier to grow, certainly the way things are looking First Aberdeen will be going in to Aberdeenshire from August!

 

[overthewater]

Personally i do think if the 3 Scottish divisions were to split and become their own company they'd do very well and find it easier to grow, certainly the way things are looking First Aberdeen will be going in to Aberdeenshire from August!

Can you say what been said?

 

[winston270twm]

Surly there is book value of UK bus?

Of course there is! But I wouldn't like to guess at what UK Bus could fetch, as far to many variables to consider

 

[winston270twm]

I don't think anyone has mentioned the "lowest-cost" operators/ smaller groups as possible candidates for (ultimately) taking-over First UK bus companies (?) --

As an example, where I live -- Worcester -- the most likely candidate would be the Rotala group, (which I would hate).

The city and county councils might also "hate" that idea (due to reported/ apparent reliability issues)
(??) -- but would they have any power or say in the matter ?

Worcester may well also interest NX as a bolt-on to NXWM (Remember they nearly a deal to acquire Redditch & Kidderminster months before the eventual Rotala takeover)

 

[DD12]

Worcester may well also interest NX as a bolt-on to NXWM (Remember they nearly a deal to acquire Redditch & Kidderminster months before the eventual Rotala takeover)

NX would be my "best possible hope", and I think that First Midland Red employees would agree.
I think the Worcester operation is highly efficient (on paper) and with the new cooperation with Worcestershire County Council (and others), I think it sets an example and model that NX might like to emulate (in places).

 

[DD12]

The dilemma is that, as has been pointed out, there would be completion issues in many areas with the 'big five' buying bits of First UK Bus. Equally, the economic state of much of the industry at present will probably mean most of the groups have little enthusiasm for buying further problems, unless there are particular strategic or good 'fits' (though of course these are the most likely to give rise to competition concerns).

The independent sector in many cases has neither the cash nor expertise to take on a chunk of First, and the 'medium size' groups and those independents with capability would only be able to cope with a very limited level of acquisition - both in terms of affordability and the management resource to sort out the problems. Whether these problems are caused by local economic conditions, or historic bad management in the Blockhead era, they take a very long time to sort out. Passengers who have deserted do not return quickly, whatever a new owner might do.

And of course in some of the PTE areas, the threat of franchising means the number of likely buyers will be at best very limited - anyone who does so will effectively value the business as assets (at best).

Add to this the inherited working practices, wage rates, pension liabilities (which may or may not be transferred) etc and in many cases it would be better to start with a clean sheet.

In summary, I think the outlook for First UK bus is largely (at best) sales at or around NAV, or in other instances, closure. A sad state of affairs.

A very good summary I think, Cesarcollie, thanks.

(I don't know what NAV is though .... ?)

 

[Robertj21a]

I think that the problem in selling off First UK Bus is simply that there's likely to be too little interest, other than at knock-down prices. Somewhere like Leeds must be their prime asset that should achieve a good amount as there would be, probably, a number of bidders. Glasgow would be interesting given that it's their next most profitable operation and there's the problem/benefit of both Stagecoach and McGills on the doorstep already.
Aberdeen and Hampshire might have some difficulties with the competition authorities. Interestingly, Leicester should be easy to sell given the profitability, and numerous other operators already in the area.
I wonder if some of the other, less profitable, operations will just wither away (as Northampton) - any local competitor simply has to register new services over the top of First's more profitable routes.

 

[Goldfish62]

I think that the problem in selling off First UK Bus is simply that there's likely to be too little interest, other than at knock-down prices. Somewhere like Leeds must be their prime asset that should achieve a good amount as there would be, probably, a number of bidders. Glasgow would be interesting given that it's their next most profitable operation and there's the problem/benefit of both Stagecoach and McGills on the doorstep already.
Aberdeen and Hampshire might have some difficulties with the competition authorities. Interestingly, Leicester should be easy to sell given the profitability, and numerous other operators already in the area.
I wonder if some of the other, less profitable, operations will just wither away (as Northampton) - any local competitor simply has to register new services over the top of First's more profitable routes.

The issue with Glasgow is that the fleet is largely knackered and will need huge investment due to the impending low emissions scheme.

 

[radamfi]

The issue with Glasgow is that the fleet is largely knackered and will need huge investment due to the impending low emissions scheme.

They've got over 4 years to reach 100% Euro VI, not particularly onerous. Really by 2023 we should be talking about zero emissions being the norm.

 

[GaryMcEwan]

They've got over 5 years to reach Euro VI, not particularly onerous. Really by 2023 we should be talking about zero emissions being the norm.

What's the Euro spec that buses will need to have come the 31st of December 2017 for when the City Centre LEZ comes into force? Surely First must be looking to get some retrofitted already? The amount of Euro 2 and 3 buses that are in going in and out of the City Centre is quite large.

 

[radamfi]

What's the Euro spec that buses will need to have come the 31st of December 2017 for when the City Centre LEZ comes into force? Surely First must be looking to get some retrofitted already? The amount of Euro 2 and 3 buses that are in going in and out of the City Centre is quite large.

20% of bus journeys by each operator by the end of 2018 to be Euro VI.

 

[Cesarcollie]

A very good summary I think, Cesarcollie, thanks.

(I don't know what NAV is though .... ?)

No problem. NAV = Net Asset Value (total assets mainly vehicles and property less any liabilities - such as finance)

 

[GaryMcEwan]

20% of bus journeys by each operator by the end of 2018 to be Euro VI.

In all honesty, I can't see Stagecoach or McGill's will have any problems with that. First on the other hand...

 

[Cesarcollie]

They've got over 4 years to reach 100% Euro VI, not particularly onerous. Really by 2023 we should be talking about zero emissions being the norm.

Not particularly onerous?!! Where will the money come from? And in respect of zero emissions (electric?) the technology isn't yet sufficiently developed yet battery range is too low,

 

[radamfi]

Not particularly onerous?!! Where will the money come from? And in respect of zero emissions (electric?) the technology isn't yet sufficiently developed yet battery range is too low,

December 2022 is a long way in the future. There are numerous places that already run zero-emission buses by installing charging facilities at terminii, often by raising a pantograph up to a charging post. Shenzhen is already fully zero-emission and has over 16,000 buses!

 

[Robertj21a]

December 2022 is a long way in the future. There are numerous places that already run zero-emission buses by installing charging facilities at terminii, often by raising a pantograph up to a charging post. Shenzhen is already fully zero-emission and has over 16,000 buses!

Even London and Nottingham are making good progress.

 

[Cesarcollie]

Even London and Nottingham are making good progress.

Neither gas nor hybrid are classed as 'zero emission'.

 

[Goldfish62]

They've got over 4 years to reach 100% Euro VI, not particularly onerous. Really by 2023 we should be talking about zero emissions being the norm.

While I disagree with your view that reaching 100% Euro VI in four years is not onerous, the point I was making is that the current fleet profile and the need for significant fleet upgrade makes the Glasgow operation considerably less attractive for potential buyers than it might at first appear.

I also note you appear to be suggesting that the Euro VI fleet achieved by 2022 should then replaced within a year by zero emission buses. Interesting!

 

[Robertj21a]

Neither gas nor hybrid are classed as 'zero emission'.

Agreed, I was referring to electric buses.

 

[radamfi]

While I disagree with your view that reaching 100% Euro VI in four years is not onerous, the point I was making is that the current fleet profile and the need for significant fleet upgrade makes the Glasgow operation considerably less attractive for potential buyers than it might at first appear.

I also note you appear to be suggesting that the Euro VI fleet achieved by 2022 should then replaced within a year by zero emission buses. Interesting!

Not quite. I was suggesting that electric buses should be commonplace in big cities by 2023, although I expect there will also be lower polluting diesel buses still in operation.

 

[Volvodart]

Seem to recall that the CFO (?) picked out Essex, Manchester and Scotland East as being particularly sickly children!

It was not that, the question was about network changes, and Aberdeen, Essex and Manchester were the only ones with network changes at that time.

 

[DMU180]

With Aberdeen’s profits I would be wondering whether this includes the coaching side of operations? The coaches make large profits so if that were included in the figure, Aberdeen may not be such an attractive prospect for the service work.

 

[Volvodart]

I do not think the coaches make that much, they got rid of the newer coaches last year and all but stopped touring and most private hire. They mainly just do school buses and oil company staff buses now, plus rail replacement and a few Megabus duplicates.

 

[Volvodart]

The Pension Fund problems have affected many First operations this time around. It will be interesting to see 'cleaner' Accounts next year so that better comparisons can be made.

I would not be so sure. Per last year's accounts, this month they have closed the future accrual for the UK Bus Defined Benefit Schemes. Presumably this is to save money, but I am unsure of the consequences of this on the pension deficit and ongoing contributions.

 

[Robertj21a]

I would not be so sure. Per last year's accounts, this month they have closed the future accrual for the UK Bus Defined Benefit Schemes. Presumably this is to save money, but I am unsure of the consequences of this on the pension deficit and ongoing contributions.

Thanks, interesting. My comment really related to the pension deficiencies being corrected only every 3 (?) years, hence the hope for 'cleaner' Accounts for this year. From your comments I guess we'll probably be just as confused as ever !

 

[DMU180]

I do not think the coaches make that much, they got rid of the newer coaches last year and all but stopped touring and most private hire. They mainly just do school buses and oil company staff buses now, plus rail replacement and a few Megabus duplicates.

Ah perhaps I have been misinformed. I was told the coaches generate the money which props up the service buses. They have some newer ones coming from aircoach by the looks of it, although not much newer!