First Group: General Discussion

[BestWestern]

In football, there are facts and form. DD12 has acknowledged the information provided by Winston.

Informed assessment of facts to predict an outcome vs. guessing is my gripe - you’re still my dreamboat

I think the whole idea that Barbie is likely to be dismembered and sold off is still pretty shocking, so I suppose we're truly into 'anything is possible' territory! Did First's 'form' lead many of us to predict this magnitude of problem I wonder? Or did most of us cooly assume 'oh they'll be alright, massive firm and all that....'.

 

[Volvodart]

For all anyone knows, it could be just the US that whoever is interested in First wants. With all the problems in the UK rail and bus divisions, it could be that First is left with the rest.

 

[overthewater]

For all anyone knows, it could be just the US that whoever is interested in First wants. With all the problems in the UK rail and bus divisions, it could be that First is left with the rest.

The company will need to buy all of first to get control to split it, in two.

 

[winston270twm]

For all anyone knows, it could be just the US that whoever is interested in First wants. With all the problems in the UK rail and bus divisions, it could be that First is left with the rest.

Surely even First Group aren't stupid enough to sell off the crown jewels, to be left with just the junk.

 

[overthewater]

Surely even First Group aren't stupid enough to sell off the crown jewels, to be left with just the junk.

A: They were stupid enough to get into this mess in the first place.
B: It would pay of alot of debts.

 

[winston270twm]

A: They were stupid enough to get into this mess in the first place.
B: It would pay of alot of debts.

Having no debts, isn't going to help them plug the holes if they have overbid / set unrealistic passenger growth targets as suspected on two of their Rail Franchises.
The loss of all US profits would far out way the benefit of having little or no debt.

Apollo have 8 days to show their hand.

 

[Robertj21a]

I think the whole idea that Barbie is likely to be dismembered and sold off is still pretty shocking, so I suppose we're truly into 'anything is possible' territory! Did First's 'form' lead many of us to predict this magnitude of problem I wonder? Or did most of us cooly assume 'oh they'll be alright, massive firm and all that....'.

Some of us certainly thought that Barbie should have been dismembered post-Blockhead......
It's all gone on for far too long and needs a proper solution, now.

 

[Dentonian]

Go on, I'll bite...

If the takeover and possible breakup of First happens, what do people think will happen to First Manc?

Its an interesting bit as no-one knows whats happening with the bus reforms, and TfGM/Andy Burnham are keeping things close to their chest at the moment. Would someone take over the existing depots, or would any potential buyers just open a depot in the area and run them off the road? Are there and likely suitors who would even want all the agro that is this lovely slice and potential goldmine?

Its becoming a thing now in the canteens where drivers greet eachother by saying 'who's taking us over today then?'!

K

What do you mean by TFGM/Andy Burnham "keeping things close to their chest"? The three options are being weighed up by TFGM (or a very small part thereof) and consultants, before being presented to GMCA and the Mayor with a recommendation, in advance of public consultation.

 

[Dentonian]

My guess would be Rochdale and Bury locals taken over by Transdev, Bolton locals taken over by Arriva and Diamond. Rusholme would probably see some Stagecoach service extended to Northenden and Sale replacing the 41, with the 42 from there staying the same. Core routes into Manchester spread between Arriva, Stagecoach, Transdev and, although far fetched, could 'Warrington's Own Buses' operate the 100?
Admittedly I'm unsure how the 'core routes' could end up, another operator could enter the market perhaps? Oldham I have no idea about.

I presume the scenario is that First Manchester would be sold (or collapse) in the near future, so Franchising or EQPs would become irrelevant. And that's assuming the "do nothing" option isn't recommended. OTOH, its because the commercial bus industry is dying on its feet that Franchising might be the only option.
I think Warrington taking over the 100 is indeed "far fetched". In fact, given their fare structure and what I have read elsewhere, Warrington is the biggest, if not only, argument left against local authority control of buses. TBH, I can't see the 100 lasting west of Hollins Green anyway. I assume First only run it in Warrington borough because of the astronomical fares "Warrington' Own Buses" charge.

 

[TheGrandWazoo]

See Clacton to Walton on the Naze service, how on earth will that be operated? Are they going to clamp it on to the Colchester services? Or have dead runs?

As I suggested (before they announced they were cutting the locals)

It may be that some of the other stuff can be interworked with the Colchester routes. However, it is well known that Clacton is one of the poorest parts of the South East; been a few years since I visited but it is truly depressed. Been surprised that it can barely sustain one depot/operator let alone two.

It was the Walton route I had in mind. Not knowing the other routes but local routes in depressed small towns with loads of pensioners isn’t that lucrative so thought they may keep and interwork Walton and possibly Harwich.

 

[Anthony ross]

I wonder if arriva would be interested in the first Manchester operations if any was to happen

 

[Robertj21a]

I wonder if arriva would be interested in the first Manchester operations if any was to happen

It's not Arriva that is showing interest at present.

 

[winston270twm]

It's not Arriva that is showing interest at present.

I'd be very surprised if Arriva even got involved in any potential First UK BUs asset disposals, their parent DB has it's own debt mountain and given the comments in another thread suggesting 'cancelled new vehicle orders' it doesn't bode well.

As for Manchester, I understand that Arriva were looking for the door themselves last year at least.

 

[Robertj21a]

I'd be very surprised if Arriva even got involved in any potential First UK BUs asset disposals, their parent DB has it's own debt mountain and given the comments in another thread suggesting 'cancelled new vehicle orders' it doesn't bode well.

As for Manchester, I understand that Arriva were looking for the door themselves last year at least.

My understanding too. I think Arriva's new bus order isn't actually cancelled, more under review and possibly subject to a reduction.

 

[overthewater]

When is the Actully deadline on the 8th? We'll have bank holiday weekend so I get feeling They slip it out at 7am Tuesday IF ANYTHING happens. If nothing happens could someelse throw its hat in shortly afterwards?

 

[TheGrandWazoo]

When is the Actully deadline on the 8th? We'll have bank holiday weekend so I get feeling They slip it out at 7am Tuesday IF ANYTHING happens. If nothing happens could someelse throw its hat in shortly afterwards?

Though being American, they aren’t on a bank holiday!

My understanding too. I think Arriva's new bus order isn't actually cancelled, more under review and possibly subject to a reduction.

My understanding too. Given the various challenges, they are reduced in favour of refurbishment and natural wastage as the fleet contracts.

 

[winston270twm]

When is the Actully deadline on the 8th? We'll have bank holiday weekend so I get feeling They slip it out at 7am Tuesday IF ANYTHING happens. If nothing happens could someelse throw its hat in shortly afterwards?

9th - I'd be surprised if they come back with a formal offer. I think West Face Capital will rally round the major shareholders for support & push for radical change instead.

 

[WatcherZero]

I thought National Express were believed to have ready funds available.

The Manchester franchising arrangements appear to have some way to go before they could be thought of as anywhere near finalised.

A very long and detailed consultation went out to 35 bus operators over the last couple of weeks. They've apparently now got the rough shape of the particular franchise arrangement they favour and are seeking to refine it into a final form with operator feedback on commercial parameters such as bidding process, market competition, small company access, etc...

 

[overthewater]

If you look back through this thread you'll find the likely problem areas - in particular you've overlooked South Yorkshire - and why only parts of Manchester ?. Potteries has improved but Essex is not looking too good.

I dont think South Yorkshire is that bad, compared to the likes of Manchester, there is council partnership and new buses so it can't be bad.

Devon was sold a few years ago. .

If you mean First South West, as I understand it BoS is in poor shape, but FK is quite healthy, having had massive investment. I suppose there's no reason why BoS couldn't be sold/closed down and First Kernow retained as a company in its own right.

Yes, I always get that bit of uk mixed up

Indeed - especially if you have an aim to make certain margins although it’s all got to be taken “in the round”. I’d suggest that Clacton may not have profitable and they’ve taken steps to improve things but perhaps it’s reached a certain point

I wonder if them loses the council tenders was the last straw?


With the rest of the empire, it's possible a small amount of trimming could get the depots all making money again?

* I dont think FSE has any bad depots bar Balfron but that has alot of council contracts.
* Slough, Is the depot on the way up? Surly it has to be since there going to compete with Redding buses.
* Potteries, Can anyone say what its like now? D&G are not having a great time either.
* Buses of Somerset: ?????
* Surly not all of First Manchester operations are in the loo?

The final straws could be tenders or other contracts that pushes it to far out.

 

[johnnychips]

As a resident (and daily user), I wonder why South Yorkshire keeps coming up as a problem, especially as the Rotherham depot has recently shut, which should save a bit of money.

 

[Robertj21a]

The last Accounts (and those previously) have shown FSY in a poor financial position. These would have related to the period before Rotherham closed so things should improve. However, it may well be that the problems are more deep rooted as I'd have to suggest that most of the fleet appears somewhat neglected and uncared for.

 

[johnnychips]

Thanks, that was quick! The buses vary from packed to almost empty so it's hard to discern the underlying problem. I don't think it's lack of patronage, and the local authorities ( represented by Transport South Yorkshire I presume) seem supportive.

 

[Robertj21a]

Thanks, that was quick! The buses vary from packed to almost empty so it's hard to discern the underlying problem. I don't think it's lack of patronage, and the local authorities ( represented by Transport South Yorkshire I presume) seem supportive.

Unfortunately, even a relatively full bus might struggle to contribute much to profits if the passengers are mostly on concessionary passes.

 

[Martin nx]

As a driver working for First Eastern Counties working out of Vulcan Rd depot in Norwich I can honestly say we have not had any info from the company on our position if any of this comes off. I take no news as good news for now!

 

[Stef434]

Unfortunately, even a relatively full bus might struggle to contribute much to profits if the passengers are mostly on concessionary passes.

have to agree a full load of concessions is a delayed source of income based on a percentage of the start and finish journey points which is why firstbus apply a higher level of a single fare
where as a bus with only ten passengers buying a day or weekly ticket may contribute a much higher level of instant revenue.

 

[tbtc]

As a resident (and daily user), I wonder why South Yorkshire keeps coming up as a problem, especially as the Rotherham depot has recently shut, which should save a bit of money.

The last Accounts (and those previously) have shown FSY in a poor financial position. These would have related to the period before Rotherham closed so things should improve. However, it may well be that the problems are more deep rooted as I'd have to suggest that most of the fleet appears somewhat neglected and uncared for.

Thanks, that was quick! The buses vary from packed to almost empty so it's hard to discern the underlying problem. I don't think it's lack of patronage, and the local authorities ( represented by Transport South Yorkshire I presume) seem supportive.

It's hard to know re FSY - easy to allocate millions of pounds of pension debt to certain Opcos to make them seem problematic (to stop Unions getting ahead of themselves) or to allocate the debts elsewhere to make a certain area look like the golden child. I'm not trying to sound like a conspiracy theorist, but I'm reluctant to take all accounts at face value given how simple it must be to shift debts and costs around.

FSY's Sheffield operation certainly seems a lot leaner than in previous years - the long strike around fifteen years ago took a long time to recover from, Stagecoach then capitalised (after taking over the old Yorkshire Traction/ Terrier operations), meaning FSY had serious competition again. They "hit back" by diverting resources elsewhere (e.g. the 22 every ten minutes from Rotherham to Barnsley, the 41/49 attacking traditional Tracky routes in Doncaster - instead of using the resources to improve the offering in Sheffield).

Rotherham is a ghost town, hollowed out by a retail park at one side (Parkgate) and massive shopping mall at the other (Meadowhall), most of the "town service" routes are unchanged since deregulation (frequencies and route numbers change, but they are still just running into the town centre that the shops used to be in, rather than a revamped network that would have extended/diverted services through to where the shops actually are now. Midland Road seemed to make more money from refurbishing buses for other bits of FirstGroup than they did actually running buses.

Some FSY routes were very ambitious - e.g. they ran the "UniversEighty" StudentLink service every ten minutes from the city centre to the Halls of Residence at Endcliffe whilst they were a building site for a few years, but once they actually opened the service was downgraded to a fifteen minute extension of the 44 then meekly handed over to Stagecoach for their 123) - there was a "90" and "100" Student services too - one of which lasted only three months and the other only a year or so - nice idea on how to deal with changing demand (due to the number of new "urban living" developments) but not staying power.

The PTE talk a good game but rarely deliver. I appreciate PTEs aren't flush with cash, but ours seem to talk big (e.g. the BRT from Sheffield to Parkgate, with Guided Busways etc) and deliver small (the proposed service was downgraded and downgraded until it became a diversion of the 69 via a short section of "bus only" road, tacked onto existing services from Rotherham to Maltby - certainly no Parkgate, no Guided Busway). Plus the resultant "X1" meant the downgrading of the X78 (a third of buses removed, slower route at Meadowbank) - the X78 having been the big flagship route under First.

Some of the cuts have made sense but others look deliberately confusing. For example, the Rotherham - Hospital service was downgraded to every ten minutes but instead of a twenty minute service south to Swallownest and a twenty minute service east to Wickersley, they run to from Rotherham to Swallownest at

xx:18
xx:38
xx:48

...and to Wickersley at

xx:08
xx:28
xx:58

... i.e. a ten/twenty/thirty minute service, rather than a simple twenty minute frequency.

The 2015 "peace" made things a lot better in Sheffield, dumped a number of "unattractive" routes on Sheffield Community Transport/ TM Travel, left Stagecoach with Stocksbridge and Killamarsh to themselves - FSY don't have many "infrequent" services left now - the 18 and 35 would probably work better with a TM Travel Solo every hour but there used to be a lot more of these routes. Sheffield City Centre is looking in better shape now with the Moor redeveloped and Sevenstone being built - the key focus of the city is moving away from the areas that the tram broadly serves (Fargate, Waingate) and towards bits that only buses can serve. That should help First (although they've given up on some areas that the tram serves - Middlewood, Norfolk Park, Halfway).

I don't think that FSY look in such bad shape, going forward - every area of the UK has problems - Sheffield's hills and propensity to shut down when it snows mean that it must be a hard place to keep services running in. We are seeing the worst of the fleet at Olive Grove (the fifty plus B7Ls) replaced by 12-plate Geminis from Leeds plus brand new Streetlites/ Streetdecks for the 1a/56, so things must be looking better?

 

[InspectorBloke]

https://www.telegraph.co.uk/busines...-embattled-firstgroup-fresh-face-needed-helm/

• Apollo urged to rebid for embattled FirstGroup as 'fresh face needed at helm'

An investor in FirstGroup has called on the US private equity giant to make a formal bid for the rail and bus company because of the transport firm's lacklustre performance CREDIT: FGP

• Bradley Gerrard

6 MAY 2018 • 8:37PM
US private equity giant Apollo Management should rebid for the embattled rail firm FirstGroup because the company needs a “fresh face at the helm”, one investor has said.

FirstGroup revealed last month it had rejected an offer from Apollo, which it claimed “fundamentally undervalues” the company.

The details of the approach were not disclosed but an investor has now called on Apollo to make a bid before the May 9 deadline after which there would be a six-month moratorium on any offers.

“I do think the management team is under pressure,” the investor, who asked not to be identified, said.
“Tim O’Toole [the current chief executive of FirstGroup] has been there a long time and not much seems to be happening so I think it does need a fresh face at the helm.”

The investor added that a formal bid from Apollo, which runs more than $250bn (£185bn) across its funds, would “give shareholders a choice” about what to do with their stake in the company, saying that the Aberdeen-based transport firm was worth more than its share price suggested.

“I do think there is value in this company,” the investor said. “It’s just a question of getting it out and it isn’t being evidenced at the moment.”

An American private equity company’s involvement in UK rail could prove controversial given the reignited political tensions surrounding the industry amid the default on the East Coast mainline by Stagecoach and Virgin Trains.

The Stagecoach and Virgin Trains joint venture which runs the East Coast mainline will hand back control of the franchise five years early CREDIT: PA
Calls have been made by the Labour Party for the railway to be renationalised in the wake of the decision by the two train firms to hand back the keys to the contract five years early.

But the investor reckoned Apollo would probably sell the UK rail business and potentially its UK bus division too, leaving a more focused US entity.

Across the Atlantic, FirstGroup has a school bus business and a corporate transit division. It also owns the leisure-focused Greyhound coach company.

Both FirstGroup and Apollo declined to comment.

 

[TheGrandWazoo]

https://www.telegraph.co.uk/busines...-embattled-firstgroup-fresh-face-needed-helm/

Winston - have you been talking to the press??

The cynic in me does wonder about the investor who wishes to remain anonymous - bought at a particular level and wants to cash out?

 

[winston270twm]

Winston - have you been talking to the press??

The cynic in me does wonder about the investor who wishes to remain anonymous - bought at a particular level and wants to cash out?

TGW - You've let the cat out of the bag! I'd done well to kept in under wraps this long........

https://www.thetimes.co.uk/article/poison-pill-threat-to-first-group-sale-f6fhmxs6m

First Group’s most prized asset could be a “poison pill” in any takeover of the transport company.

Ahead of this week’s “put-up or shut-up” deadline for Apollo Global Management, the US fund that made a takeover approach for First Group last month, City analysis of the train and bus operator’s assets raised questions over its Great Western Railway franchise as well as its Trans Pennine and South Western railway divisions.

In a withering evaluation, Joseph Thomas, analyst with HSBC, wrote: “First Group is not a well-loved company. Its 2013 rights issue fixed its balance sheet problems and freed capital that should have sparked a recovery in the underlying business. Unfortunately, it hasn’t worked like that. For the past five years, First Group has been stuck in a no-man’s land.”

A poison pill is City argot for an asset or shareholding that makes a company difficult to acquire. Put-up or shut-up is a deadline under City rules by which a potential buyer must either make an offer for a company or walk away.

Apollo is one of the giants of American private equity with $250 billion under management. First Group has annual revenue of £5.5 billion from running passenger trains and buses in the UK and school buses, local buses and Greyhound intercity coaches in America. It employs 100,000 people.

Despite Apollo’s approach, triggered by the underperformance of First’s shares, which had been at barely a third of their level before the rescue rights issue five years ago, Mr Thomas said: “While a potential buyer has emerged, we continue to struggle to see clear value in the group.”

One of the sticking points for HSBC is the status of Great Western Railway (GWR), one of three rail franchises that has not changed hands since privatisation more than 20 years ago; the others are Virgin West Coast and Chiltern Trains.

GWR last year made £47 million profit trading on margins of nearly 5 per cent, about twice the average level of other operators.

This has been a sore point across the sector because of government inaction over the re-franchising of GWR — the rebranded First Great Western — and the multiple franchise extensions granted to First despite it being referred to by many as Worst Late Western.

HSBC said that GWR’s state-backed strong performance masks losses at Trans Pennine, which runs trains in the north of England, and South Western Railway (SWR).

“We remain concerned that two new UK rail franchises [Trans Pennine and SWR] have been won on terms that are simply too aggressive,” HSBC said.

A spokesman for First said that GWR’s margins “fluctuate” and that Trans Pennine is growing passenger revenues by 12 per cent as it satisfies pent-up demand, while SWR is protected under Department for Transport agreements linked to economic growth in London and employment levels.

 

[overthewater]

I take it either way the current broad at First want last long? I'm surprised no one else has throw its hat into the ring.