National Express’ parent group is to sell its yellow school bus division to focus on other aspects of its business, including Spanish subsidiary ALSA
National Express parent company Mobico, formerly known as the National Express Group, has laid out plans for the sale of its North American school bus operations to investment capitalists I Squared Capital, for a value of around $608m (around £455m).
Mobico Group Chief Executive Ignacio Garat commented: “This agreement is a significant milestone for Mobico. It is a first step in strengthening the Group’s balance sheet and will allow us to reallocate resources away from a capital-intensive business as we focus on continued deleveraging alongside funding our pipeline of growth opportunities, especially in ALSA. The transaction follows a comprehensive process and reflects the work that has been carried out with the School Bus management team to improve its performance over the last 18 months as well as the ongoing headwinds. In I Squared, we have found an owner with considerable experience in the sector that will invest in the future of the business. We are continuing to review options to further accelerate the Group’s debt reduction and deleveraging.”
Chief Executive of Mobico’s School Bus division Tim Wertner commented: “Since I joined the business in June 2023, our focus has been on recovering lost routes, securing new contracts, recruiting and retaining drivers and delivering price rises above inflation. I am pleased that our success has attracted a buyer of I Squared’s quality and we look forward to partnering with I Squared to deliver the growth opportunities ahead. I am confident that with our new owners we will be ideally placed to continue delivering for our people and for the communities we serve. I would like to thank everyone at School Bus for their hard work and commitment in creating the business we have today.”
Global Chief Investment Officer and Managing Partner at I Squared Gautam Bhandari added: “School transportation is more than just a daily commute. It’s a vital link to education, which underpins a functioning society regardless of stage in the economic cycle. We are proud to add this essential service to our portfolio and look forward to continuing to support its growth.”
Providing background to the sale, Mobico says that since the pandemic, it has sought to address the long-term challenges which the pandemic created for the School Bus operation, and following the appointment of a new leadership team in 2023, significant operational improvements were made, including improving driver retention and recruitment, route reinstatement, and improved contract pricing. The Group says it has also improved fleet allocation, which has led to better asset utilisation, cash flow and customer satisfaction, leading to the business delivering a net positive route outcome for the current school year bid season, the first in over a decade.
However, whilst School Bus has demonstrated its recovery from the pandemic’s effects, Mobico says it continues to require significant maintenance and growth capital investment and has experienced persistent market challenges such as driver wage inflation and, more recently, potential fleet cost inflation from new tariffs imposed by the Trump administration.
Mobico’s School Bus division is the second largest player in the North American school bus market with a 10% share of the growing outsourced market, operating approximately 14,135 vehicles.
