Arriva Stagecoach deal is given the go-ahead

BUS staff in part of the Tees Valley will have new bosses from the end of this week.

BUS staff in part of the Tees Valley will have new bosses from the end of this week.

The move follows the Office of Fair Trading’s (OFT) clearance of Arriva’s purchase of Stagecoach Darlington’s operations, including its Faverdale depot.

The deal will see 78 staff transfer to Arriva North-east’s operations from Sunday.

Liz Esnouf, commercial director for Arriva North East, said: “We are very pleased with the Office of Fair Trading’s decision to clear the deal.

“From August 26 all daily, weekly and monthly town area tickets will be valid on Stagecoach’s Darlington services.”

She added: “We look forward to continuing our positive partnerships with the local authority and other stakeholders in and around Darlington,

Arriva, based in Sunderland, plans to sell its Feethams depot to Darlington Council, as part of the deal.

The sale of the depot will aid the local authority’s ambitions to redevelop that area of the town.

Arriva’s operations include bus, train and other commuter services in nine European countries.

It is currently the largest private bus operator in Italy and Denmark, and from December 2007, will start to operate rail services in the North west of Poland.

Revenues from its mainland European operations have increased by 140% to £752.3m in the last four years.

Stagecoach released a trading statement yesterday covering the first three months of its financial year.

It said passenger revenues had risen sharply as more motorists ditched their cars in favour of buses and trains.

The group, which operates South West Trains and a fleet of 7,000 buses and coaches, reported better than anticipated trading, despite flooding causing localised disruption to some of its UK operations.

Like-for-like revenues from its UK bus arm were up by 7.6% on a year earlier in the 12 weeks to July 21, with the figure for UK rail ahead 15%.

The company’s Virgin Rail joint venture, which operates Cross Country and West Coast mainline services, saw a gain of 13.4%.

Increased use of ticket barriers at stations along the South West Trains network is also thought to have boosted revenues.

Other initiatives have included the targeting of car users with the offer of a free week’s travel.

Stagecoach described its pricing strategy as among the most “conservative” in the sector and said money generated through increased bus and rail use was being invested into services and infrastructure.

Analysts were impressed by the trading update, with Investec Securities increasing its profit estimate for the financial year to April 30 by 20% to £135m. It also upgraded its estimates for 2008 by 17% to £155m.

Investec analyst Joe Thomas said: “The upgrades are across the business but driven particularly by outperformance in South West Trains and the West Coast Main Line.”

The figures will help offset some of the disappointment surrounding the company’s failure to secure the East Coast Main Line and Cross Country rail franchises.

It was beaten to the former by National Express, with the new-look Cross Country service going to Arriva.

However, Stagecoach said it was satisfied with its overall rail bidding record after winning a seven-year deal for the East Midlands franchise, worth around £235m a year in revenues. It also renegotiated its West Coast franchise.

Stagecoach added yesterday: “We are encouraged with the current trading performance of the group and the outlook remains positive.”

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