National Express shares fall as firm warns Covid-19 recovery will be slow

National Express has warned that its recovery from the Covid-19 crisis will be slow and uncertain, reporting £60m losses for the first half of 2020 as passengers stayed away from its bus and coach services.

The transport company, which operates services in Britain, the US, Spain and Morocco, saw its battered share price fall 10% after admitting it could not predict when demand would return or offer guidance on 2020 earnings. The shares are now changing hands at 159p, down from 469p at the turn of this year.

The business’s chief executive, Dean Finch, said demand remained suppressed despite some signs of recovery. However, National Express said it had secured sufficient cash to see it through a second possible lockdown this year and a slow 2021, positioning itself to survive and pick up more business should competitors fall.

Although aggregate demand fell by 80% during the spring, revenues were about 50% of normal levels, due to pre-existing contracts and support from government and local authorities for services such as US school buses. In the UK, its West Midlands bus network has been underwritten by the government until further notice, while passenger numbers remain at just over half of pre-Covid levels.

National Express’s market-dominating intercity coach network is now running only about a third of its pre-Covid network, with half of the seats available due to social distancing, having shut down entirely during April-June. The firm plans to use the coaches to move into private hire and corporate commuter markets, a sector in which many small businesses have struggled to keep going.

Finch said the firm had ”secured exceptional governmental funding” and was “swift to save operating costs”. But he warned: “While there are some signs of demand returning, levels are both significantly reduced and subject to variability given local lockdowns, the impact of quarantines and uncertainty over the extent of US school reopenings. We do not know when pre-pandemic levels of demand will return.”

However, Finch, who is soon to depart to head housebuilder Persimmon, said: “We remain fundamentally positive about the future.

“When we do emerge out of the pandemic the world will be confronted with the need to power an economic recovery with high quality, cleaner and greener public transport at its heart. The alternative is inefficient, congested towns and cities with dirty air.”

Gerald Khoo, an analyst at Liberum, said: “We continue to believe that public transport usage reverts to normal on a 12 to 24-month view. However, the prospects of a quick and sharp recovery are fading.”

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