TRANSPORT operator FirstGroup said revenue growth had weakened further as it battles the recession.

The group, which runs buses in Huddersfield and operates rail franchise First TransPennine Express, said like-for-like rail revenues slowed to 1.7% in the six months to September 30.

Growth slowed to 2.3% in First’s UK bus division, where the group is burdened with a much higher fuel bill this year.

Shares in First fell 2% although the firm said the business was showing “resilience” and had met management expectations during the period.

The slowdown in revenues has prompted a “relentless focus on budgetary control” and major cost-cutting drive across the group, which predicts a “challenging” year ahead for the transport industry.

The Aberdeen-based group, led by chief executive Moir Lockhead, has shed more than 4,000 jobs – mainly in North America – in a bid to save £200m a year.

In the USA, where First operates 60,000 yellow school buses, there were more signs of weakness as contract renewal rates slipped from above 95% to 90%.

Its Greyhound coach service reported a 20%-plus fall in revenues due to the weakness of the UK economy.

FirstGroup made an all-share merger approach to struggling National Express earlier this year.

It pulled out of the running in July, leaving National Express the subject of a potential £765m takeover by its largest shareholder and private equity firm CVC.