As the transport privateer posted a 60 per cent increase in its operating profits to £77 million for the six months to June this year, RMT renewed its call for an end to the "rail-franchising rip-off" and for action to stem the "obscene" flow of profits out of the bus industry.

And the union warned that any threat to its members' jobs as a result of planned "integration" of the group's UK operations would be resisted.

"Rail passengers have every right to feel incensed that National Express has increased its rail profits by 40 per cent and siphoned £28 million out of the rail industry in just six months," RMT general secretary Bob Crow said today.

"Privateers like NatEx are feathering their shareholders' nests at the expense of passengers and our members, converting public subsidy and over-the-odds fare increases into fat profits.

"Coming the day after the news that fares are to go on rising ahead of inflation year on year, this will be seen by passengers as a huge slap in the face.

"The environment, passengers and rail workers are all crying out for a rail policy that makes rail travel affordable, attractive and accessible, but the franchising system is standing in the way and it has to go.

"As long as franchising stays in place and prices people off the railways the industry will be unable to play its rightful role in cutting carbon emissions by enticing people off the roads and onto trains

"Our members will note the 7.5 per cent increase in dividends for National Express shareholders, and will no doubt bear it in mind when the time comes to table pay claims.

"The company should also understand that any threat to our members' jobs will be resisted," Bob Crow said.

See also:

Dwindling rail overshadows National Express profit

Reuters: July 26, 2007
By Pete Harrison

LONDON - Britain's National Express Plc reported a forecast-beating 18 percent rise in first-half profit on Thursday, driven by its UK trains and a 3 percent increase in passengers on its Spanish buses.

But fears for the future of its rail division overshadowed the strong results.

Chief Executive Richard Bowker told reporters on Thursday National Express planned to merge its UK bus, coach and rail businesses, creating savings of around 11 million pounds ($22.7 million) a year.

Some analysts said the boost to margins would be largely offset by the fact that much of its profit growth comes from its dwindling UK rail division, which will shortly lose four of its six franchises.

The UK overhaul will lead to around 100 job cuts, mostly management, said Bowker, a former head of Britain's Strategic Rail Authority.

"We will upgrade our 2008 estimates by about 7 percent this morning to reflect the expected cost savings from the UK integration," said analyst Joe Thomas at Investec.

Group underlying profit before tax rose to 79 million pounds in the six months to June 30, compared with 67.2 million a year earlier and an average analyst forecast of 77 million.

National Express shares rose 1.6 percent to 11.74 pounds by 0926 GMT, valuing the group at around 1.8 billion pounds.

LOST FRANCHISES

"As we enter the second half we are encouraged by the group's prospects," it said in a statement.

Analyst Dominic Edridge at UBS said: "As most of the outperformance came from UK rail, where National Express will lose four franchises by the year-end -- Gatwick Express, Silverlink, Midland Mainline and Central Trains -- we believe the potential for upgrades may be somewhat limited."

National Express carried about a quarter of Britain's 1 billion train passengers last year, but will soon only be left with the smaller c2c and One franchises.

The group has lost out in all three competitions to run UK rail franchises available so far this year and only has the Intercity East Coast line left to bid for.

"Whilst we have been disappointed by the recent franchise announcements, we are confident that our bids are ambitious, deliverable and structured to generate shareholder value over the long term," it said.

GNER, a unit of Sea Containers which operates the Intercity East Coast line, was forced to hand it back after submitting an over-optimistic bid in 2005 and has since struggled to break even.

"We await the outcome of the bid in early autumn," said National Express.

"A successful bid could increase our 2008 estimates by around 12 percent," said Investec analyst Joe Thomas.

The group's 14,000 North American school buses broke even in the six months and the division had its best-ever bidding season, winning $38 million of net new business including contracts in Tennessee and South Carolina.

National Express said trading was encouraging at its Spanish bus and coach business Alsa, the country's biggest, which it bought in 2005 and will soon be complemented by its new Spanish acquisition Continental Auto, giving it 2,100 vehicles there.

Alsa increased underlying operating profit by 6 percent to 28 million euros ($38.7 million) in the first half, despite bad weather in May.

The interim dividend was increased by 7.5 percent to 11.56 pence.

See also:

National Express axes jobs after missing out on rail franchises

Citywire: 26 July 2007
By Douglas Bence, Companies Correspondent

Transport group National Express expects to axe 100 jobs as it shakes up its UK operations and brings the bus, coach and trains businesses into one operation based in Birmingham.

The changes follow the loss of a number of rail franchises, either to other operators or because of reorganisation by the Department of Transport.

This has seen the group steam from being the country’s largest rail operator to having just two, the London-Essex operator C2C and Anglian operator One.

Chief executive Richard Bowker said he is proud of the group’s record on trains and he is keeping his fingers crossed for the Inter-City East Coast bid decision which is expected in the autumn.

‘While we have been disappointed by the recent franchise announcements, we are confident that our bids are ambitious, deliverable and structured to generate shareholder value over the long term,' he said.

Revenue rose 5% to £1.3 billion in the six months to 30 June, up from £1.25 billion last time. Group operating profit was up 60% to £77 million against £48 million.

Normalised operating profit was up 8% to £90.6 million from £84 million; normalised profit before tax was up 18% to £79 million against £67.2 million. Group net debt fell from £438.4 million to £412.7 million.

The interim dividend rises 7.5% to 11.56p from 10.75p last. National Express shares rose 12p to £11.68.

Bowker says that the high margin overseas divisions contributed almost half the group's operating profit.

‘In Spain, Alsa's operations went from strength to strength with its financial performance supported by the opening of new coach stations as well as trialling new products and services to its customer base,' he added.

‘In North America our approach to bidding and retention of contracts has resulted in the division reporting another record bid season.'

See also:

National Express to axe 100 jobs in UK shake-up as first half-yearly profits up 18 pct

Hemscott: 26 July, 2007

LONDON - National Express Group PLC said it plans to shed about 100 staff in an 8.5 mln stg shake-up of its UK operations as it announced an 18 pct rise in first half pretax profits to 79 mln stg, slightly above analysts' expectations.

Chief executive Richard Bowker said the redundancies would be primarily in management roles and there would be 'significant cost savings' in property and back office costs.

He said the integration of the three UK businesses - bus, coach and rail - into one business unit with a unified management based in Birmingham will cost about 8.5 mln stg in 2007 and is expected to save the group about 11 mln stg a year. Bowker said quite a lot of the functions currently carried out by the group's head office will move into the new operation.

Bowker said the integration will enable it to respond more effectively to changes, but added: 'It will not affect front line service delivery.'

National Express recently failed to win the new East Midlands UK rail franchise, which was won by Stagecoach Group PLC and will replace its Midland Mainline (MML) contract. It was also among the bidders defeated by Arriva PLC in the race for the new Cross Country franchise.

The group has gone from being the country's biggest train operator a few years ago to having two franchises, London-Essex operator C2C and Anglian operator One, beyond next year.

Its hopes for expanding its UK rail portfolio now rest on its bid for the prized East Coast inter-city rail contract, the outcome of which it expects in the early autumn.

Some analysts have suggested train operators have been offering over-ambitious premium payments or subsidy reductions in a desperate bid to win contracts.

There has been speculation that one bidder for the East Coast has offered more than the 1.3 bln stg premium pledged by Sea Containers unit Great North Eastern Railway (GNER), which had to give up the franchise amid problems in meeting the payments.

In a conference call with journalists, Bowker refused to say whether National Express was the East Coast bidder in question and also declined to reveal the contents of a recent, confidential debrief from the DfT about why it had lost MML.

However, he said the group remained happy with the bids it had put in, saying they were 'ambitious, deliverable and structured to generate long term shareholder value.'

He refused to comment on whether the group would import the management from MML, which has topped recent industry performance tables, into the East Coast franchise if its bid is successful.

'We've got plans for East Coast if we win, but it wouldn't be right to comment on those or on what will happen to the people at MML,' he said.

'Whatever happens in the long term, if they have to depart the group, they'll do so with our thanks and gratitude.'

Bowker also declined to elaborate on recent speculation that it may bid for the Chiltern Railways franchise being put up for sale by its owners Laing and fund manager Henderson.

'We will always keep an eye open for high quality assets that added value and complement our overall portfolio,' he said.

Bowker said he was particularly pleased with the performance of the company's overseas operations, which include recently acquired Spanish coach and bus businesses Alsa and Continental Auto.

He said the group will look for acquisitions in Europe on an individual basis in countries as well as the UK and Spain where there is a benign regulatory environment, pro-public transport attitude and a favourable approach to public-private partnerships.

'If opportunities come up elsewhere, of course we'll go and look at them,' he said.

National Express said trading across its divisions in the first half had been strong and it was encouraged by the company's prospects as it enters the second half.

The group's UK operations continued to perform well and it was particularly pleased with the progress made by its UK coach division to attract new customers and also generate repeat business.

Group revenues rose 5 pct to 1.31 bln stg from 1.25 bln stg previously, normalised operating profit lifted 8 pct to 90.6 mln stg and the interim dividend will be increased by 7.5 pct to 11.56 pence.