In its latest update, National Express Group says it traded slightly above its previously guided base case, which assumed revenue to be around 50% of pre-Covid 19 expectations until the end of August.
The Group says that tight cost controls remain in place driving positive EBITDA (Earnings Before Interest, Taxation, Depreciation and Amortisation) and cash flow, and further notable contract wins in the period demonstrate its service standards and approach. This includes a provisionally awarded 240-bus contract for up to nine years in Lisbon, Portugal, and a $40m, five year paratransit contract for up to 75 vehicles, in Fresno, California. The Group reports that its underlying liquidity position remains strong, broadly in line with the half year position.
In Europe, ALSA continues to benefit from very strong customer relationships and does not have any revenue risk in over 40% of its contracts, which will increase to 46% in 2021. Post lockdown, ALSA’s revenue has already grown back to 66% of last year.
In North America, the Group is operating services on 65% of its school bus routes and has agreements in place across school bus contracts that secures nearly 70% of pre-Covid 19 revenue. This figure is expected to increase as more agreements are reached with customers in the coming weeks.
Transit and shuttle performance varies by contract, but National Express says that strong customer relationships means it is securing 65-80% of pre-Covid-19 revenue and expects to continue to do so for the balance of the year.
The UK business is continuing to recover and see good passenger growth. In the West Midlands the operator is running 103% of last year’s service and carrying 58% of the patronage and in Dundee, it is operating 92% of last year’s service with 61% of the patronage, with costs under-written by their respective national transport authority. Further coach services have been added where social distancing restrictions still enable a commercial expansion in the network, and National Express says it is encouraged to see continued high demand for those services.
Chris Davies, Interim Group Chief Executive and Group Finance Director, said: “We continue to be pleased that our strong customer relationships are sustaining high levels of revenue during the pandemic’s ongoing uncertainty. We are grateful to our customers and the public authorities who have recognised the essential role our services play in maintaining the ability of people to get to work and to keep the economy functioning, even during such challenging times.
“This robust revenue collection and ongoing tight cost control is underpinning positive EBITDA and cash flow projections. We are encouraged to see continued passenger growth across the Group, as our services provide safe and reliable services to those choosing to travel.
“We remain resolutely optimistic about the longer term opportunities for the Group. The enduring strength of our customer and stakeholder relationships during the pandemic demonstrates that our reputation for safe and excellent service has provided a crucial resilience as we navigate this uncertain period. In addition – as the recent contract wins in Lisbon and California demonstrate – they also provide the platform for future growth once we emerge from the pandemic.”