Stagecoach directors take 50% pay cut

Perth-based transport giant Stagecoach Group on Monday released a trading update outlining “the actions it has taken to help guide the business through this period of uncertainty” amid the coronavirus outbreak.

“Our directors are sacrificing 50% of their salaries / fees for a period of time, will not receive any bonuses for 2019/20 and will not receive any pay increase for 2020/21,” said Stagecoach.

“Pay negotiations and decisions in respect of other staff will reflect the challenging environment we currently face …”

Stagecoach said it has over £290m of available cash and undrawn, committed bank facilities to underpin the continuity of the business.

But it added: “Having been on course to deliver our expected adjusted earnings per share for the year ending 2 May 2020, the quickly developing COVID-19 situation means we no longer expect to achieve our previous expectation. 

“Whilst we continue to monitor the situation closely, it is too early to predict reliably the effect on profit.  

“We have taken decisive action, and have contractual protections in place, to help the business withstand this more challenging period.”

In particular, Stagecoach said that “based on existing contractual arrangements and discussions with government bodies, we expect to maintain a significant proportion of our revenue during the downturn.”

Stagecoach continued: “Around 33% of our regional bus revenue is ordinarily receivable from public authorities in respect of concessionary revenue for passengers who receive free or discounted travel, revenue to support socially desirable services and revenue for operating school services. 

“Our ongoing engagement with the authorities includes discussing how that revenue will be protected. 

“Our recent daily data suggests that concessionary patronage is now down around 50% as a consequence of the outbreak of COVID-19.  

“Commercial revenue from customers directly purchasing tickets for travel ordinarily accounts for approximately 63% of regional bus revenue.  

“Our recent daily data suggests that commercial patronage is now down around 40% as a consequence of the COVID-19 situation.

“We are reducing our regional bus mileage to take account of the changes in customer demand.  

“Our services on all days will more closely resemble Sunday services. 

“The result is a reduction in mileage of around 40% and we will continue to review our service levels.”

On its London bus services, Stagecoach said: “The London bus business is paid by Transport for London to operate specified bus services and the revenue of the business is not directly affected by short-term changes in passenger numbers.

“The COVID-19 situation has adversely affected bus patronage in London. 

“We and the other London bus operators are in discussions with Transport for London about contract changes and mitigating the financial effects on bus operators of any changes.”

On its rail business, Stagecoach said: “In rail, we continue to expect the 2019/20 operating profit from our now-expired, wholly owned rail franchises to more than offset our business development and bidding costs.” 

Stagecoach concluded: “Given the uncertainties caused by the impact of COVID-19, we currently consider it unlikely that we will propose any further dividends in respect of the year ending 2 May 2020.”

Stagecoach CEO Martin Griffiths said:  “We are all facing an unprecedented challenge at this time and the impact is being felt by our business and employees as with many others.

“Importantly, we have good liquidity and are taking the right, decisive actions to help mitigate as much of the impact of the current situation as we can.  

“We are also working hard with our industry partners, government and local authorities on measures to protect public transport for the long-term.

“Our bus, coach and tram services are hugely important to our country’s economy and communities, even more so at this time.”