Engineering works dent growth for London Midland
RAIL operator London Midland has seen a reduction in passenger revenues and journeys due to service disruption caused by Network Rail engineering works in its first quarter, its parent group has reported.
Go-Ahead Group said passenger revenue for the franchise grew 4% in the half year to December 27, 2014, while passenger journeys grew 1.6%.
“This is significantly lower than the previous year as a result of the impact of Network Rail engineering works in the first quarter,” said the group in its first half statement.
It is not the news the company was looking for as it heads into talks with the Department for Transport on an extension of the franchise contract.
“The franchise will continue to operate its original contract until it begins a seven-month extension on the same terms in September 2015. We continue to work with the DfT regarding a potential direct award contract from March 2016 to June 2017.
“The franchise has continuously improved its operational performance and is now delivering its best service reliability of the last two years. During the period, London Midland introduced 40 new train carriages to its fleet, increasing capacity and frequency and improving the customer experience,” added Go-Ahead.
Passenger revenue for the franchise for the half year was £32.2m (2014: £30.4m) – an increase of £1.8m.
Commenting, David Brown, Go-Ahead chief executive, said: “We believe that increased rail infrastructure investment is essential to improve services and we welcomed the Government’s £38bn programme of infrastructure investment last year. While an investment programme of this scale will deliver enormous benefit in the long term, it will inevitably result in disruption while infrastructure improvements are made. We acknowledge the significant effect this has on passengers and are working closely with Network Rail to minimise the impact of this disruption.”
For the group as a whole, which includes various bus and rail services, revenue in the period was £1,558.7m (H1 2014: £1,370.0m), up 13.8%, or £188.7m. The majority of this increase was attributable to the rail division, predominantly due to the introduction of the GTR franchise on 14 September 2014.
Operating profit rose 6.1%, or £3.2m, to £55.3m (H1 2014: £52.1m), with an overall decrease in operating profit margin of 0.3ppts to 3.5% (H1 2014: 3.8%) as a result of reduced margins in the rail division. Pre-tax profit was £44.7m (H1 2014: £40.3m), up 10.9%, or £4.4m.
