First Group: General Discussion

[winston270twm]

Arriva Manchester (Wythenshawe) is now a tiny operation, with just 4 routes, all running north out of Altrincham (19/19A, 245, 247 and 263). The residual 130 is now run from Macclesfield and the 10 from Bolton. These 4 routes would fit with Rotala's current tendered operations in South Trafford, but as with all tendered services, they could easily be lost if undercut by another bidder when next tendered.

I agree both Arriva depots routes would fit nicely within Rotala's existing Diamond Bus NW ops, however, their interest in those ops dates back over two years, things may have moved on since with First also deciding to exit their ops etc. Only Arriva's commercial Manchester routes hold the most value, as you say, tenders can easily be won or lost. Vision Bus seem to be expanding rapidly in the Wigan / Bolton area.

 

[smtglasgow]

Catching up with things…Can’t help thinking that the real winners from any sale or break-up of Firstbus will be the ‘middling’ opcos. Businesses like Cymru, Leicester or Hampshire that turn in a profit but rarely see much investment (or if they do, it’s after a long period of famine). Glasgow, Bristol & Leeds will always do well, but the second-tier companies have been held back under First’s stewardship.

I hope National Express are doing their sums at the moment. Assuming Firstgroup sell UK Bus to a single bidder, it would be a big commitment for NX – and potentially risky – but this is a one-off opportunity to get their hands on some decent urban operations. No idea what they do with the bits they don’t want (and that might include South Yorkshire as much as Potteries), but there is a core group of opcos that would form a decent business. Of all the potential suitors, National Express seem the most interesting and the one with the fewest CMA hurdles.

 

[Jordan Adam]

Catching up with things…Can’t help thinking that the real winners from any sale or break-up of Firstbus will be the ‘middling’ opcos. Businesses like Cymru, Leicester or Hampshire that turn in a profit but rarely see much investment (or if they do, it’s after a long period of famine). Glasgow, Bristol & Leeds will always do well, but the second-tier companies have been held back under First’s stewardship.

I hope National Express are doing their sums at the moment. Assuming Firstgroup sell UK Bus to a single bidder, it would be a big commitment for NX – and potentially risky – but this is a one-off opportunity to get their hands on some decent urban operations. No idea what they do with the bits they don’t want (and that might include South Yorkshire as much as Potteries), but there is a core group of opcos that would form a decent business. Of all the potential suitors, National Express seem the most interesting and the one with the fewest CMA hurdles.

Although we shouldn't rule it out, I can't see Firstbus being sold as one.

 

[TheGrandWazoo]

Although we shouldn't rule it out, I can't see Firstbus being sold as one.

Depends if you're thinking that it would be sold to another transport business.

Looking at the Arriva sales process, it would appear that three of the four bidders widely touted as preparing bids are asset management/private equity funds. It may be they that purchase First Bus as one package and then seek to sell off parts in order to unlock value. After all, that's all CC are wanting to do!

 

[DragonEast]

Although we shouldn't rule it out, I can't see Firstbus being sold as one.

I have the same feeling. How does a single purchaser avoid the same issues as First had? The gap (or yawning chasm) between theory and reality.

Doesn't a sale (by whoever) usually require a willing purchaser? I suspect the easy bit is finding a buyer, the hard bit comes when we try to complete the deal.

 

[Jordan Adam]

Depends if you're thinking that it would be sold to another transport business.

Looking at the Arriva sales process, it would appear that three of the four bidders widely touted as preparing bids are asset management/private equity funds. It may be they that purchase First Bus as one package and then seek to sell off parts in order to unlock value. After all, that's all CC are wanting to do!

I see the point you're making, it's just as DragonEast says how does a future buyer avoid the issues First already have. Given how well publicised First's issues are i can't see anyone being keen on taking on all of UKBus. As i say, i wouldn't totally rule anything out at this point, however i find it being broken up and sold by depot/area/opco more likely than it going as one.

 

[richw]

Given how well publicised First's issues are i can't see anyone being keen on taking on all of UKBus.

As a whole uk bus turns about 7-8% profit if removed from Group figures. That’s pretty average for any bus operator in the uk. Turn around or lose some of the big loss accruing parts and that will rise higher

 

[overthewater]

Can National Express turn around yorkshire, Somerset and Stoke on Trent?

 

[TheGrandWazoo]

I have the same feeling. How does a single purchaser avoid the same issues as First had? The gap (or yawning chasm) between theory and reality.

Doesn't a sale (by whoever) usually require a willing purchaser?

I see the point you're making, it's just as DragonEast says how does a future buyer avoid the issues First already have. Given how well publicised First's issues are i can't see anyone being keen on taking on all of UKBus. As i say, i wouldn't totally rule anything out at this point, however i find it being broken up and sold by depot/area/opco more likely than it going as one.

As RichW has pointed out, First's margins are climbing. They're now at 7.5% and that's with the haemorrhaging figures of First Greater Manchester in there. Also, it's 7.5.% with whatever levels of central group contribution being funnelled back to the centre. It's not as unattractive as people think - that's not to gloss over the issues that there most certainly are in terms of certain OpCos. However, most of them have a value in terms of fleet, freehold property etc and, it has to be said, there are probably some diamonds in the rough that should they be sold could certainly be developed. After all, Go Ahead (despite FGM being a big loss maker AND the threat of franchising) are suitably comforted that there's something there to be had if it's managed better. As has been said, we know the shining lights of First - Bristol, Leeds, Glasgow but also there's some not bad ones such as Leicester, Hampshire and Wales as were also mentioned. There are definitely the weak ones - South Yorkshire and Somerset are ones that spring to mind (though take the local take on Essex too) but there's a decent core in there and that will be attractive.

Also, the point I'm trying to make is that people are looking at this as a bus company and that's not really the right way to look at it. As with Arriva, people are looking at this as a business - one in which there is value to be unlocked. Apollo (remember them) are looking at Arriva - they don't give a stuff about buses in Altrincham or river ferries in Copenhagen. They are there to make money for their investors. Might well be that a private equity group will offer First an acceptable sum and at the speed they want and they can then divest, and leave the new owner to do the individual deals.

 

[Robertj21a]

As a whole uk bus turns about 7-8% profit if removed from Group figures. That’s pretty average for any bus operator in the uk. Turn around or lose some of the big loss accruing parts and that will rise higher

First Bus has been trying to 'lose' some of the operations for years - but nobody wants the poorer performers (hence why Northampton eventually just withered away)

 

[richw]

First Bus has been trying to 'lose' some of the operations for years - but nobody wants the poorer performers (hence why Northampton eventually just withered away)

That may well be the way at some poorer places, reduce what’s on offer to the point of closure rather than sale.

 

[winston270twm]

Catching up with things…Can’t help thinking that the real winners from any sale or break-up of Firstbus will be the ‘middling’ opcos. Businesses like Cymru, Leicester or Hampshire that turn in a profit but rarely see much investment (or if they do, it’s after a long period of famine). Glasgow, Bristol & Leeds will always do well, but the second-tier companies have been held back under First’s stewardship.

I hope National Express are doing their sums at the moment. Assuming Firstgroup sell UK Bus to a single bidder, it would be a big commitment for NX – and potentially risky – but this is a one-off opportunity to get their hands on some decent urban operations. No idea what they do with the bits they don’t want (and that might include South Yorkshire as much as Potteries), but there is a core group of opcos that would form a decent business. Of all the potential suitors, National Express seem the most interesting and the one with the fewest CMA hurdles.

I'd like to see NX Group do a deal to buy a large chunk of First's UK Bus urban bus ops, totally agree it's a one-off opportunity and should treated as such. Dean Finch knows First Group ops pretty well having worked there for 5 years in senior positions up until 2009 before moving to Tubelines, then subsequently NX Group as CEO.

It would be interesting to see what NX do to turn around the poorer performing ops under First, they're not shy in investing in their fleets.

 

[tbtc]

There are definitely the weak ones - South Yorkshire and Somerset are ones that spring to mind (though take the local take on Essex too) but there's a decent core in there and that will be attractive

South Yorkshire could be a reasonable operation, but it'll never be as lucrative as Leeds (where there's effectively no bus competition and no light rail) so will always be the poor relation, taking midlife vehicles from Leeds (I think we are due more 12-plate Geminis soon?).

The "bus war" that Stagecoach rekindled after taking over Yorkshire Traction/Terrier calmed down a long time ago, the two operate in partnership on a few corridors now, there's no chance of any Light Rail expansion (unlike Manchester/ Nottingham/ Birmingham, where busy bus corridors are more susceptible to trams turning up in five/ten years) - the Rotherham extension was massively delayed/ overbudget and only happened in the first place because we agreed to be the guinea pigs for a trial scheme that may be of use elsewhere in the UK.

The expensive depot in Rotherham has closed, so the expenses aren't as high now - you could prune the "town services" a bit or hope that Powells/ TM will take over some local routes.

I think also that the strength of Leeds sometimes means enthusiasts ignore the weaknesses at the rest of West Yorkshire - Bradford/ Halifax/ Huddersfield are in similar economic straits to Bolton/ Oldham/ Doncaster/ Rotherham, but nobody is talking about selling off the non-Leodensian areas of the old Yorkshire Rider.

Similarly, First seem to be making good money in other economically underachieving places like Motherwell (the old Scottish Bus Group bits of "Greater Glasgow" being more lucrative than the ex Strathclyde Buses, AIUI?)

Also, the point I'm trying to make is that people are looking at this as a bus company and that's not really the right way to look at it. As with Arriva, people are looking at this as a business - one in which there is value to be unlocked. Apollo (remember them) are looking at Arriva - they don't give a stuff about buses in Altrincham or river ferries in Copenhagen. They are there to make money for their investors. Might well be that a private equity group will offer First an acceptable sum and at the speed they want and they can then divest, and leave the new owner to do the individual deals.

This bears repeating. Private Equity will get their fingers into any pies that they think are undervalued - whether that's to nurture the business/ split the business into smaller components to unlock growth or take a "scorched earth" approach where they try to force landlords to accept huge rent reductions (and then when things don't work, dump the pension liabilities on the PPF whilst paying themselves huge consultancy fees!).

For example, nobody dismissed the recent takeover of Patisserie Valarie because the new owners weren't "proper Patisserie men" (in the way that some people on here can only countenance bus companies being run by "proper bus men).

First Bus has been trying to 'lose' some of the operations for years - but nobody wants the poorer performers (hence why Northampton eventually just withered away)

I wonder if First put silly valuations on their businesses in the way that they are (or, certainly used to be) reluctant to part with any midlife buses (whereas Stagecoach have been happy to ditch midlife buses if anyone else is prepared to put in a reasonable bit for them.

First have had a tradition of running vehicles into the ground (or keeping them sat in yards rotting/corroding/ gathering dust - depending on your preferred metaphor - until the book value ran down - hence some unwanted ten year old low floor artics sat at the back of depots whilst fifteen/twenty year old high floor buses continued in service). Maybe they have similarly had such a high value placed on subsidiaries that nobody else was willing to match?

Just a hunch, mind.

 

[Bletchleyite]

Talking of Nat Ex, I note that their Dundee operation has been branded "Xplore Dundee" with little or no NX branding..this looks to me like being primed for a sale (indeed, it took me a while to work out who the operator was, given that the company itself is a generic name too - I did wonder if it was a municipal originally). So do they want more operations?

 

[overthewater]

Its been like that for ages. Rebranded what two years ago?

 

[Bletchleyite]

Its been like that for ages. Rebranded what two years ago?

2015 apparently.

 

[winston270twm]

Talking of Nat Ex, I note that their Dundee operation has been branded "Xplore Dundee" with little or no NX branding..this looks to me like being primed for a sale (indeed, it took me a while to work out who the operator was, given that the company itself is a generic name too - I did wonder if it was a municipal originally). So do they want more operations?

Yes NX are interested in more operations - but not at any cost. They have to tick all the boxes.

 

[TheGrandWazoo]

Talking of Nat Ex, I note that their Dundee operation has been branded "Xplore Dundee" with little or no NX branding..this looks to me like being primed for a sale (indeed, it took me a while to work out who the operator was, given that the company itself is a generic name too - I did wonder if it was a municipal originally). So do they want more operations?

Xplore Dundee was indeed a former municipal - Dundee Corpy/Tayside. Privatised as an MBO and sold to NX, it was bought a year after NX had divested themselves of their bus ops in the north east and home counties.

 

[Jordan Adam]

Talking of Nat Ex, I note that their Dundee operation has been branded "Xplore Dundee" with little or no NX branding..this looks to me like being primed for a sale (indeed, it took me a while to work out who the operator was, given that the company itself is a generic name too - I did wonder if it was a municipal originally). So do they want more operations?

Xplore Dundee was indeed a former municipal - Dundee Corpy/Tayside. Privatised as an MBO and sold to NX, it was bought a year after NX had divested themselves of their bus ops in the north east and home counties.

Add to that you also have the new Sub-Brand of Xplore Dundee called "Xplore More" who are away to start a coach service between Dundee and Edinburgh Airport.

 

[option]

I might point out that when Manchester proposed a congestion charge with the monies ploughed into public transport, the electorate in every single council area rejected it. Fact is - there are no votes in it.

Yet all the under-18s that use public transport won't have had a vote...

 

[Bletchleyite]

Yet all the under-18s that use public transport won't have had a vote...

I'd oppose it anyway. General taxation is the way to fund public transport, as that gives it a long-term basis. As London has found out, if your Congestion Charge is too successful people stop paying it...

 

[TheGrandWazoo]

Yet all the under-18s that use public transport won't have had a vote...

Well, yeah, but that’s the reality...

I'd oppose it anyway. General taxation is the way to fund public transport, as that gives it a long-term basis. As London has found out, if your Congestion Charge is too successful people stop paying it...

That’s as maybe but it shows that people aren’t generally in favour of specific taxation (or increased taxation) so it would beg the question as to how it would be paid for - perhaps not for discussion here though (before the mods get interested)

 

[option]

Also, First Manchester could not be purchased by the council or local government or any relevant authority as it is specifically precluded under section 22 of the 2017 Bus Services Act http://www.legislation.gov.uk/ukpga/2017/21/section/22/enacted

Does this also apply to bus companies owned by local authorities?
https://en.wikipedia.org/wiki/Category:Companies_owned_by_municipalities_of_England

 

[TheGrandWazoo]

Does this also apply to bus companies owned by local authorities?
https://en.wikipedia.org/wiki/Category:Companies_owned_by_municipalities_of_England

They cannot form an operator.

Those are already in existence AND are arms length limited companies so does not apply.

 

[90sWereBetter]

Eugh, pretty much everything First-related on Facebook, particularly on FirstBus Enthusiasts now has comments like "who's buying this" and "when's Stagecoach/NX/Arriva taking us over". So utterly tedious.

I genuinely hope First UK survives intact and thrives, if only to prove the naysayers on here and elsewhere wrong.

 

[overthewater]

Unlikely, I can't see first staying intact and some sort of a change is likely. Even if it becomes a spin off company can the name still be used?

 

[smtglasgow]

Still think it’ll be sold off as a single entity. If another transport group takes it, they’ll keep the good bits and attempt to sell the rest. If its an investment vehicle, a piecemeal sale to the highest bidders is more likely - as others have, releasing maximum value. As for the weakest parts that we assume no-one wants, what are the chances of some (optimistic?) management buy-out – perhaps buying for a token amount, but assuming the debt?

 

[overthewater]

Every local paper in the land has pick up the story, Its like most papers are not even trying to get stuff right....

https://www.clactonandfrintongazett...-in-doubt-as-first-looks-to-sell-on-business/

THE future of bus travel in Essex is in doubt after transport giant First announced it could look to sell off the bus service side of its business.

First is one of the largest commercial bus operators in the county along with Arriva - the owners of which are also believed to be looking to sell up.

It means two new operators could soon be behind the majority of buses serving passengers in Essex.

But First says it will continue to operate "as usual" and hopes disruption for passengers will be minimised as it looks to secure a sale.

A spokesman for First Essex said: "We have announced that we will be pursuing strategic options, through a sale or other means, to separate First Bus from First Group.

"Please be assured that as this process unfolds, we will continue to operate our services as usual, working closely with our local authority partners and demonstrating our commitment to our customers through the service we offer them.

"As a result, First Bus is now on a much stronger footing, and we believe it is the right time to pursue structural alternatives so the business can continue to provide excellent service, ensure the best possible future for our staff and continue to meet stakeholders’ requirements."

A spokesman for Essex County Council said it was following the matter

https://www.business-sale.com/news/business-sale/west-country-bus-company-up-for-sale-218987

FirstGroup plc, the multinational transport group, has announced its plans to sell its regional bus company, First West of England.

First West of England began its life as a horse drawn carriage service in 1875 and today has six depots providing bus services in Somerset, Bath, Bristol, Weston-super-Mare, West Wiltshire and South Gloucestershire.

The parent company has been under fire for delivering returns well below the sector average and maintaining high debt levels. Leading shareholders have for some time been making calls for the company to sell off assets.

First Group owns South Western Railway and Great Western Railway in the UK and also the Greyhound bus business in the United States, which it bought in 2007 for $3.6bn as part of Laidlaw.

Since then, the company’s shares have dived around 80 per cent.

Having said that, the company’s revenues are set for a 10 per cent gain this year to £7.1bn with profits are expected to be up nearly 3 per cent to £711 million.

But this is no thanks to the lacklustre performance of the UK businesses, particularly the train lines which have been beset with problems and are running on operating margins of just 2.9 per cent.

Compare that with First Student, the company’s student bus provider in the US (the biggest in the country), which has margins of 8.8 per cent.

The business up for sale, First West of England, has 1800 employees and serves around 70 million passenger journeys each year, growing at around 10 per cent annually.

https://www.theboltonnews.co.uk/new...concerns-as-first-set-to-sell-bus-operations/

A TRANSPORT says it is extremely concerned about its members after a major bus firm announced it could change hands.

Struggling transport giant FirstGroup revealed in its statement of financial results this week that it would be separating from First Bus through "a sale or other means".

The bus company operates a large number of services in Greater Manchester including many in Bolton, such as the popular 575 and 471 routes.

A spokesman for FirstGroup said: “Please be assured that as this process unfolds, we will continue to operate our services as usual, working closely with our local authority partners and demonstrating our commitment to our customers through the service we offer them.

“In recent years we have improved customer service at First Bus by investing in our buses and new technology, transforming our networks, and making operations and maintenance more efficient.

“As a result, First Bus is now on a much stronger footing, and we believe it is the right time to pursue structural alternatives so the business can continue to provide excellent service, ensure the best possible future for our staff and continue to meet stakeholders’ requirements."

However, the move has sparked concerns from the Rail, Maritime and Transport union (RMT).

The union's general secretary Mick Cash said it "will be doing everything in its power" to defend jobs and seek guarantees from FirstGroup concerning ongoing employment.

 

[daodao]

Every local paper in the land has pick up the story, Its like most papers are not even trying to get stuff right....

https://www.theboltonnews.co.uk/new...concerns-as-first-set-to-sell-bus-operations/

First's sale of their Queen's Road depot means that their residual operation in Greater Manchester is no longer an integrated operation but has a big hole in the middle, and is now in direct competition with its former operation now run by Go Ahead on some key routes such as Manchester to Middleton.

 

[Retired Driver]

If it does happen who will take over Buses Of Somerset like Taunton Bridgwater Yeovil areas and also First Weymouth.

Possibly Stagecoach in Weymouth, I think they would turn the business around!