London Midland warns passenger revenues under threat from West Coast Main Line

RAIL operator London Midland has seen a 9% increase in passenger revenues during the first four months of the year although it has warned growth may be slowing due to competition from the West Coast Mainline.

Go-Ahead Group, London Midland’s parent said in a trading update that while revenue and passenger increases were in line with expectations it needed to be mindful of the competing WCML service, which is operated by Virgin Rail on behalf of the Department for Transport.

It states in the update: “Underlying revenue growth in the overall rail division remains solid and in line with our expectations. Passenger journey data across all companies continues to be impacted by changes in Travelcard allocations, inflating growth rates.”

With reference to London Midland – which saw a 6% increase in passenger journeys during the period – it added:  “We continue to invest to improve operational performance, however the rate of passenger revenue growth in the London Midland franchise is beginning to slow as a result of increased competition on the west coast mainline.

“Against a backdrop of reduced subsidy receipts, more challenging trading conditions and higher operational costs, London Midland has carried out a reorganisation to reduce the number of management and administrative staff, in order to reduce costs. This reorganisation will result in an exceptional charge in the current financial year.”

Generally, the transport group said it remained in a good financial position with strong cash generation and a robust balance sheet, underpinning its dividend policy and allowing it flexibility to pursue value-adding opportunities.

“We continue to focus on our key strengths of providing high quality, locally-focused and innovative transport services,” it said.