FIRSTGROUP £100M HIT

The bus and train group saw profits tumble 44 per cent to £30.3million as Greyhound profits dropped 71 per cent to £14million in the face of rising unemployment despite offering cheaper travel to planes and trains.

FirstGroup profits were also hit by higher fuel costs, largely the result of a hedge taken out when oil prices were much higher. It expects to recover the resulting £100million hit next year.

But the shares rose 18fp to 394p as chief executive Sir Moir Lockhead said there were signs the group’s UK trains business, which includes Great Western, was stabilising. He said the ­company expected to meet City forecasts of around £254million for the year to March, with Greyhound picking up as the US recovered. The company raised the half-year dividend by 10 per cent to 6.65p a share.

FirstGroup made an approach for National Express in June. Lockhead said the company did not expect to make another, although it would probably make a bid for the East Coast rail franchise when the Government puts it up for tender.