Stagecoach Boosts Spend in Europe in Chase for Bus, Rail Routes

Stagecoach Group Plc plans to expand its bus service in Belgium and the Netherlands and will more than double its investment in Europe as the bus and rail operator looks to benefit from the continent’s push to liberalize public transport.

Stagecoach’s expenses related to expansion in Europe will rise to about 10 million pounds ($15.8 million) in the current year from 4.2 million pounds a year earlier, Finance Director Ross Paterson said in an interview Wednesday.

Stagecoach has opened new bus services in Italy this year and has expanded operations in Germany, France and the U.K. where Chancellor of the Exchequer, George Osborne, is pursuing private franchises to manage railways and the devolution of powers to cities, which could open new bus routes to tender.

“Germany has completely deregulated, if we’re to believe what we’re reading, France will deregulate sometime in the next four weeks,” Chief Executive Officer Martin Griffiths said by phone. “These are enormous markets, enormous populations, others are looking at these markets undoubtedly as well, but we think there is a lot to play for.”

Stagecoach said today that revenue for the full-year rose 9.4 percent at to 3.2 billion pounds. Growth in rail and in Europe, where passenger numbers increased by 60 percent, offset a drop in oil prices which has prompted passengers to rely less heavily on public transport, the company said.

More Opportunities

Considerations by the U.K. central government to devolve powers to cities in the north of England, including Manchester - - Stagecoach’s second biggest bus market after London -- might mean new bus services are opened to private bidders. That would follow a trend of franchising within the U.K.’s rail networks, of which Stagecoach currently operates the Virgin Trains East Coast, South West Trains and East Midlands Trains railines.

“Now that we’ve got the general election out the way, there’s a recognition that franchising is looking very positive and will be the way forward,” Griffiths said.

More than half of the rail franchises will be reopened for bid through Prime Minister David Cameron’s second five-year term, with two or three awarded each year, Paterson said. Stagecoach submitted a proposal 10 days ago to manage the TransPennine Express railway that runs across the north of England. It is also in a joint venture bidding for control of the East Anglia franchise.

“We won’t win them all -- we won’t bid them all -- but we think there are real opportunities,” said Griffiths. “We would hope to pick up our fair share of the market.”

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