Shares of Perth-based transport giant Stagecoach Group rose 9% on Thursday after it issued a trading update saying its available liquidity has increased significantly “due to positive cash flow and new borrowing capacity.”
Stagecoach said its available cash and undrawn committed bank facilities have increased to over £800 million.
The firm said Moody’s (Baa3) and S&P (BBB-) have reaffirmed its investment grade credit ratings — but have revised the rating outlooks to “negative” from “stable.”
Stagecoach also welcomed the news that the UK government “has confirmed a bus, tram and light rail restart programme, which will provide operators in England outside London with payments for an increased level of services.”
The UK government has also announced a bus restart programme with £254 million made available for a phased increase in local bus services in England outside London as steps are taken to ease lockdown measures.
In its outlook, Stagecoach said: “With the continuing uncertainty of the COVID-19 situation and the UK’s recovery, it remains difficult to reliably predict financial performance for the new financial year ending 1 May 2021.
“In the short-term, the actions we have taken and the continuing support of government should ensure we continue to generate positive EBITDA and avoid significant operating losses, and we are working to re-build profitability over time.
“Despite the immediate challenges and risks ahead, over the longer term we believe our business and our transport markets continue to have strong fundamentals.
“As a major public transport provider and Britain’s biggest bus and coach operator, we have opportunities to grow our business and contribute to thriving communities.
“We continue to believe that by working together, the private sector and our local authority partners can deliver the public transport services our customers want.”
Stagecoach Group CEO Martin Griffiths said: “We see a lasting effect of the COVID-19 pandemic on travel patterns with an acceleration in trends of increased working from home, shopping from home, telemedicine and home education.
“We anticipate that it will be some time before demand for our public transport services returns to pre-COVID levels and we are planning for a number of scenarios.
“At the same time, we see positive drivers for our business from a renewed societal focus on health, wellbeing and the environment.
“Public transport can play a major role in a cleaner, greener and more resilient economy and society, tackling climate change with strong government action to reduce car use.”