TROUBLED transport firm National Express today warned profits were below hopes after revenues slowed in the challenging economic conditions.
The firm, which remains at the centre of takeover speculation, warned annual pre-tax profits will be slightly below previous forecasts due to higher debt fees and rising costs in the United States.
Revenues for the quarter to September 30 fell 1%, although National Express said core operations in the UK and Spain continued to perform resiliently.
It added that discussions continued with the Government about the return of its loss-making East Coast Main Line franchise, which it paid too much for at the height of the economic boom.
Today’s update comes after the recent collapse of a planned takeover by a consortium led by its largest shareholder, the Spanish Cosmen family.
South West Trains owner Stagecoach had been working with the consortium, but is now in talks with National Express about a separate merger proposal.
Stagecoach submitted a letter last Friday outlining aims for a deal that would see National Express take up to 40% of the merged group, worth £1.7 billion.
At the same time, National Express is working on plans for a rights issue to shore up its balance sheet and ease its £1 billion debt pile.
It is also looking to offset the impact of falling revenues through a programme of reduced operating mileage and overhead costs.
The majority of its UK coach operation is outsourced to third party operators, allowing the company to flex services according to demand. In UK rail, National Express said the focus had been on improved productivity and cost control.
Revenues on its East Anglia franchise grew 1% in the quarter, while London commuter service c2c delivered a "solid performance" amid increased Olympic site traffic.
UK bus revenues grew at 2%, despite unemployment in its core Birmingham market reaching 12%.
National Express said: "Trading conditions have remained difficult during the third quarter with revenue slowing in a challenging economic environment."
