Shares of Aberdeen-based bus and rail giant FirstGroup plc fell as much as 7% on Tuesday amid a stock exchange statement from the firm saying the UK Department for Transport (DfT) “has exercised its option to extend the Emergency Measures Agreement (EMA)” for the company’s Great Western Railway (GWR) until at least June 26, 2021.
FirstGroup said discussions are underway with the DfT about its three other rail franchises “which are under EMAs until 20 September 2020.”
On July 8, FirstGroup published annual results showing a £300 million loss before tax and warning of a “material uncertainty” as to whether it can continue as a going concern.
FirstGroup has been trying to sell its considerable North American businesses but it warned investors on July 8 that “a material uncertainty exists that may cast significant doubt on the group’s and the company’s ability to continue as a going concern and, therefore, that it may be unable to realise its assets and discharge its liabilities in the normal course of business.”
FirstGroup shares have fallen almost 70% in the past 12 months.
On Tuesday, FirstGroup added: “Under the EMA, the DfT waive our revenue, cost and contingent capital risk and GWR are paid a fixed management fee with the potential for a small performance-based fee.
“Before the end of the EMA period in June 2021, the DfT has an option to further extend the EMA …”
FirstGroup CEO Matthew Gregory said: “We welcome the news of the extension of the EMA for GWR.
“This demonstrates the essential nature of GWR’s services to the communities it serves, and provides important clarity and continuity for our customers, employees and wider stakeholders.
“Across the network we are increasing service levels to provide more capacity as schools recommence and work and leisure facilities reopen, and we are taking all necessary steps to ensure our passengers continue to travel safely.
“This includes running services with more carriages to allow for distancing, enhanced cleaning and sanitisation of our trains and ensuring more customer-facing employees are readily available.
“We look forward to delivering further plans that will bring improvements for passengers over the next few months and into the future.”