Bus start: National Express says services coming back

National Express (NEX) has celebrated US schools bringing kids back and outlined a new post-Covid-19 risk: convincing potential drivers to pick a job over “enhanced unemployment benefits” after the summer holidays. The company said its US school bus business was 96 per cent back to hybrid or full attendance. 

Its UK and Spanish services are still on their way. In Spain, National Express is running 55 per cent of urban and regional services, with passengers at 45 per cent of the 2019 level. In the UK the figures are much better, with 100 per cent of buses running relative to 2019, with a passenger level of 70 per cent. 

The “revenue-protected” Spanish and Moroccan unit, ALSA, managed sales growth and an operating profit while the UK could not, however. The overall underlying operating profit of £23m was a marked turnaround from a £31m loss last year, although National Express still only managed breakeven on an underlying profit basis. 

Chief executive Ignacio Garat said this operating profit shift came despite a sales drop because of “cost reduction actions”. 

Garat flagged two risks for National Express. The first is getting enough drivers in the US and the second, in the UK, is new competition in the intercity coach market from FlixBus, a European company he said was “willing to sustain heavy losses to build share”. FlixBus will charge you £4.99 for a one-way ticket on its London-Manchester service, while the same service from National Express is £12.90.

Consensus estimates compiled by FactSet see the company’s loss per share narrowing for the full year, to 4.2p, compared to 58p in 2020. The recovery looks in motion, though uncertainties linger. Hold. 

Last IC View: Hold, 303p, 18 Mar 2021