DEBT-laden National Express lurched further into the red today after clocking up pre-tax losses of more than £48 million for the first six months of the year.
Losses of more than £20 million on its soon to be nationalised East Coast rail line helped turn profits of £52.4 million a year earlier into a deficit of £48.1 million, it was revealed today.
The Birmingham-based group has also set aside a hefty sum to cover its exit from the East Coast rail franchise, which is being taken back into Government hands later this year.
The news adds pressure to the transport giant as it faces crippling strike action on the East Anglia line in a two-day walkout starting today.
It is also the focus of a potential bidding battle as suitors encircle the financially-troubled group.
National Express has made provisions of £54.7 million surrounding the East Coast route from London to Scotland, which it walked away from earlier this month after failing to renegotiate a deal with the Government. Re-nationalisation of the line is now expected in the second half. The firm stressed today that, having taken legal advice, it was “confident” the Government could not also seize its East Anglia and c2c franchises and would fight any moves for cross-default.
National Express is fighting battles on a number of fronts following a torrid past few weeks that have also seen its chief executive Richard Bowker quit to take up a new rail job in the United Arab Emirates.
As well as the rail strikes over pay and conditions – which could extend to six more days in the coming weeks if the dispute is not resolved – National Express is also fending off takeover approaches.
Its first would-be buyer, larger rival FirstGroup, walked away last week, citing “uncertainties” surrounding the business following the East Coast exit.
The company is now being eyed by another transport group, Stagecoach, alongside a consortium led by National Express shareholders, the Spanish Cosmen family, and private equity giant CVC.
The Birmingham group said it had to concentrate first and foremost on a plan to get back on track and refinance its £1.2 billion debt mountain.