National Express owner cutting jobs in cost savings drive

National Express owner Mobico has revealed back-office jobs are being cut across the business to slash costs further as it cautioned annual profits will come in at the lower end of expectations.

The group said a “large-scale cost reduction programme” was under way with “further opportunities being explored across the group” as it faces ongoing competition in the UK coach market and falling bus passenger numbers.

Jobs are being cut in the UK arm, with support and back office roles largely being impacted, as it looks to ramp up savings due to trading woes.

The group did not say how many jobs were affected, or in which locations, but a number of the cuts are being made as a result of plans to merge its UK coach operations within its better-performing Spanish Alsa business from January next year.

Its renewed push on costs comes as the group said full-year underlying operating profits are now set to come in towards the lower end of the £180 million to £195 million expected range.

This sent shares plunging as much as 14% at one stage before recovering losses later in trading on Wednesday.

Mobico said UK coach revenues dropped 7.4% in the third quarter to the end of September as it flagged “increased competition on key routes” and as it offloaded loss-making businesses, including Clarkes of London, The Kings Ferry, Lucketts and Worthing Coaches.

Bus revenues across the UK rose 2.9%, but it saw passenger numbers and commercial revenue both fall 3.7%, with the firm blaming lower consumer confidence.

Alongside the UK coach and bus woes, this is also down to issues with a loss-making contract at WeDriveU, its North America transit and shuttle services business, according to the group.

Overall, it saw group-wide revenues lift 5.4% in the latest quarter, as its Spanish Alsa business delivered a 4.1% rise in revenues and its German rail arm notched up a 14.3% hike in turnover.

Phil White, executive chairman of Mobico, said: “We continue to focus on simplifying and strengthening the group, taking decisive actions to improve operational and financial performance.

“These actions include a comprehensive cost savings programme, further leveraging Alsa’s best practice across the business and exploring options to monetise the assets of the UK bus business ahead of franchising.”

Mr White, who had been chief executive of the then National Express Group between 1996 and 2006, returned to take the helm at the business earlier this year after former boss Ignacio Garat left in April following a series of profit warnings.

Shares have been severely under pressure this year due to the profit alerts and Mr Garat’s departure, with the stock down 74% in the past 12 months.