Route loss hits National Express

National Express is set to quit the East Coast route later this year

Transport group National Express has reported a half-year loss after setting aside £54.7m to cover the cost of exiting the East Coast rail franchise.

The firm made a pre-tax loss of £48.1m in the first six months of 2009, down from a profit of £52.4m last year.

Earlier in July, the government said it would take the East Coast route back into public ownership later this year.

National Express, which is the subject of takeover interest, said it had lost £20m on the East Coast route this year.

The company said that it would not be paying an interim dividend as part of its attempt to cut its debts.

National Express's debt now stands at £977.5m, having been cut by £200m in the past six months, and the firm said it would focus on reducing it further.

It also said it had begun the search for a new chief executive, following the departure of Richard Bowker earlier this month.

Suitors circle

A group including Spain's Cosmen family and private equity firm CVC has made a takeover proposal for National Express.

National Express said its coach business had increased profitability

Rival UK transport group Stagecoach has also said it is eyeing National Express, saying it may seek to pick up some of National Express's assets if it is bought by a consortium. Reports have suggested that Stagecoach may launch its own bid for the company.

National Express said it was, "evaluating whether value can be achieved for shareholders through third party approaches to acquire the group".

First Group had originally planned a takeover move for National Express, but pulled out because of the uncertainties surrounding the firm's rail business.

When the government announced it would be taking the East Coast rail franchise back later this year, it said that it believed it also had grounds to end National Express's two other rail franchises - East Anglia and c2c.

However, in its results statement, National Express said it had taken legal advice and it was "confident" the government would not be allowed to do this.

"The group would oppose any such attempt," it said.

The company said that most of its business had traded "solidly" in the first half of the year, despite "challenging conditions".

Its UK coach operations increased profitability, as did its two continuing rail franchises.

National Express also said it had made "excellent progress" in its plan to cut annual operating costs by £40m.

As well as operating bus, coach and rail routes in the UK, National Express also operates bus and coach services in Spain and school bus services in the US.

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