Transport giant Stagecoach is buying back ELBG - a company it sold four years ago - at a fraction of the cost. It sold its London bus operations to Macquarie Bank in June 2006 for around £264m. ELBG subsequently saw a decline in profitability before going into administration. Now Stagecoach is buying it back for £52.8m.
Proceeds from the sale in 2006 were used to reduce debt at Stagecoach. At the time Macquarie said Stagecoach’s London operations suited its need for assets with a predictable cash flow. But it put ELBG up for sale earlier this year amid a backlash from staff after attempts were made to cut wages in order to shore up falling profits.
What does Stagecoach boss Brian Souter have in mind for workers at ELBG? His plan is to improve the operational performance of the company and to cut its back-office costs through “synergies”. That sounds a lot like job cuts.
ELBG is the third largest operator in London, with 15% of the market. It runs 1,400 buses from ten depots. For the year to April, it generated revenues of £254m - mostly from a fixed-fee contract with TfL.