Bus operator Rotala primed for growth
BUS and coach operator Rotala is targeting growth with the sustained development of its new acquisition and an upgrade to its fleet.
The Birmingham group, which operates the Flights Coaches business, acquired Preston Bus Ltd (PBL) earlier this year in a deal worth £3.2m.
In its latest interims the group said the PBL operation had performed well, contributing significantly to an 18% growth in revenue.
In a statement, Rotala said: “The acquisition of PBL provides Rotala with a significant expansion of its activities into a new geographical area. This area is approximately the same distance from Birmingham as the existing activities of the company to the south west of Bristol and creates a new hub for the operations of the group.
“PBL operates in the same way as any depot in the group network, with all administrative and support services provided centrally by the Birmingham headquarters. We are pleased with the start the business has made under our ownership and, as Preston sits in a region which has a historically high level of bus usage, it offers, in the longer term, attractive areas of potential expansion.”
Rotala has also committed to the purchase of 15 new hybrid power buses from the Optare Group. These will be delivered in the last quarter of the year.
Rotala has received a subsidy of £1.6m from the government’s Green Bus Fund for these vehicles, which will be deployed principally on routes in Solihull, Bath and Preston.
After selling 30 vehicles from its existing fleet, the group has also committed to the purchase of 12 new conventionally powered vehicles. The vehicles will again be delivered before the end of the year and will give Rotala one of the youngest bus fleets in the industry with an average age of about 7.5 years.
Despite the group’s heavy fuel use – its fleet consumes around 13m litres per annum – the board said it would not be hedging supplies. It said it was opting to do this because of the continued volatility in the oil market.
“If a clear view of future trends emerges and a fuel hedge can be obtained at an economic rate, then the board will be quick to take out a price hedge for at least 12 months ahead,” said non-executive chairman John Gunn.
“With the acquisition of PBL, more than 50% of the group’s revenues derive from commercial bus services. Our largest competitors in the West Midlands and in the South West have concentrated this year on trimming their operations and optimising their own performances. This has enabled us to take up new routes as the incumbent operators have retreated,” said Mr Gunn.
“We see considerable opportunities for organic growth, particularly in our commercial bus business.
“We feel that, with a lower cost base than our larger competitors and a young bus fleet, we have a worthwhile advantage; we are keen to expand further our commercial bus services in our chosen areas of operation.”
The group’s performance in the first half was boosted by new contract wins and it said this would continue into the second half. It has recently started two new routes for National Express and these are seven year contracts which in a full year will bring in around £3.2m a year.
