Go-Ahead Sees Second Half In Line With Forecasts

Rival Stagecoach said earlier this month that the medium term outlook for its commuter-focused rail franchise was bleak.

British transport firm Go-Ahead Group Plc said on Tuesday its performance should be in line with expectations in the first half that ends this month and the second half to June 2009, despite the ailing UK economy.

Finance Director Nick Swift said the company, which operates rail and bus networks in London and elsewhere in the UK as well as an airline services division, had been cost-cutting to weather the downturn and was also protected by regulated fare increases.

"We saw this coming, although we may not have seen it as being as grim as it is ... like-for-like costs are down a couple of percent on a year ago," he told Reuters, adding that headcount had been reduced by not filling vacant positions.

Go-Ahead shares, already down 60 percent this year, were off nearly 5 percent at 963.5 pence by 0815 GMT, valuing the group at around 400 million pounds ($601.8 million).

Rival Stagecoach said earlier this month that the medium term outlook for its commuter-focused rail franchise was bleak, sending the shares down and ejecting the company from the FTSE 100.

Swift agreed rail revenue growth in the second half was likely to be slower than the first, but regulated fare increases as high as 8 percent in south-east England and a profit-sharing agreement with the Department for Transport (DfT) would buffer the company.

Go-Ahead said overall pretax profit for the first half to Dec. 27 would be in line with expectations, with no major drop-off seen in bus revenue.

But it also said the weakness in the airline industry would make it tough to improve financial performance at its airline services arm, forcing it to take an impairment charge of 40 million pounds ($60.18 million).

"We will have to front up and take a write-down. We are doing a lot with the business, but it's fair to say it is not as core as rail or bus," Swift said, although he declined to comment on whether the arm was officially up for sale. ($1=.6646 Pound) ($1=.6646 Pound)