GTR margins will be halved
Go- Ahead shares on the London Stock Exchange tumbled sharply on news that GTR (Govia Thameslink Railway) margins will be halved during the franchise period.
The news was released with GA’s pre-close trading statement for the year ended 2 July 2016. GTR services have been disrupted by industrial action over the proposed introduction of (Southern)driver only trains and passengers continue to suffer from the Thameslink rebuilding works at London Bridge.
“While we do expect margins to improve in the longer term; given the very challenging performance and industrial relations environments, we no longer expect to recover the profit shortfalls and as a result margins, on an adjusted basis, over the life of the contract are now more likely to be nearer to 1.5% than the 3% previously expected,” explained Group Chief Executive, David Brown.
Go-Ahead has a 65% majority stake in the Govia joint venture (Keolis being the other partner).The seven year franchise was awarded in 2014, and it is the largest operation in the UK.
GA also operates the London Midland and Southeastern franchises.
The trading results also forecast improvements in annual revenue: Southeastern (5.1%); London Midland (11.2%); and GTR (3.1%). Passenger journey increases are expected: Southeastern (2.3%); London Midland (8.8%); and GTR (2.9%).
GA’s full year results will be announced on 8 September 2016.