NX Group issues latest trading update

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National Express Group has issued its latest trading statement, which includes details of new contract gains by its two recently introduced UK divisions, NEATS and NETS

National Express Group (NX) says in its latest update that the trend of improving revenue performance has continued, with around 70% of last year’s revenue secured in October compared to around 60% in August. The company said it continues to generate positive EBITDA, with October delivering the highest monthly total in 2020 to date, and retains significant liquidity. It expects to close the year with around £1.5bn in cash and undrawn committed facilities.

Recently the operator has won a number of new contracts, including in Portugal, where it has been provisionally awarded a 200 urban bus contract in Porto, complementing the previously announced 240 bus contract in Lisbon, and in the UK where it has been awarded a major employee shuttle contract.

ALSA

In Spain, NX says ALSA continues to benefit from its good customer relationships and contractual protections, such as no revenue risk in over 40% of contracts, a figure expected to grow closer to 50% by the end of 2021 as recent new contracts begin. In October, urban services reported 60% patronage on 100% of mileage.

Beyond the contracts with revenue protection, the Group said that the recent tightening of lockdown policies is affecting Spanish long haul and regional coach passenger numbers, which are currently running at 15-20% of last

NX continues to use the Spanish government’s ERTE furlough scheme to protect cash flow, which has been extended into 2021.

North America

In North America, the Group reports that it is currently operating services on 75% of its school bus routes, either through full ‘traditional’ or ‘hybrid’ arrangements, and says that the situation appears to have stabilised with limited expectations of the remaining 25% of routes returning to school in 2020.

It has secured around 80% of its pre-Covid school bus revenue and continues to closely manage costs including laying off drivers where customers have not provided payment. The Group says it expects the majority of these lay-offs to be temporary, with employees recalled once service resumes.

UK

NX’s UK bus business continues to benefit from government support and the Group says that patronage levels have also proved resilient. At the start of the second lockdown in England, NX West Midlands continued to operate 103% of last year’s service, with around 60% of the patronage. In Dundee, where a tiered system remains in place, it is operating around 90% of last year’s service, with 60% of the patronage.

National Express Accessible Transport has won two contracts in Warwickshire, whilst from 9 November the operator temporarily reduced its UK coach network to around 9% of last year’s service, reflecting England’s second lockdown, and again placed a large majority of staff on furlough. However, the company reports that before the latest round of restrictions, demand had returned encouragingly with 51% of service operating at nearly 80% occupancy rate.

National Express Transport Solutions – created from the merger of The Kings Ferry Group and Lucketts Group – has recently won a major employee shuttle contract worth £5m revenue during the remaining months of 2020.
Newly-appointed Group Chief Executive Ignacio Garat said: “In my first weeks in the Group, I have been struck both by my colleagues’ professionalism, and by the resilience of our leading portfolio of businesses. The positive vaccine news of the last few days may signal a faster service recovery in the medium term than we had hitherto envisaged. Nonetheless, these remain difficult times for the public transport sector, at least in the short term. I am convinced, however, that National Express will continue to weather the challenges we face and has strong foundations in place to prosper once the pandemic is over.

“I am pleased by the strength of our relationships with customers and governments across the Group. This is reflected in the amount of support we have and continue to receive. We will continue to proactively engage customers and relevant authorities to navigate the challenges the pandemic presents. Alongside this, we will continue to closely and carefully manage costs and remain very disciplined in the returns we seek on investment, as part of our broader focus on maintaining the Group’s financial position.

“National Express will retain its focus on safety, operational excellence and being an employer of choice, values that have underpinned its success in recent years. Fundamentally, National Express is a service company and we will redouble our efforts and programmes to make sure every customer’s experience is outstanding. These attributes will help us navigate the pandemic and ensure National Express retains and extends its market leading position and drive our future growth.”