Rail passenger growth stalls at Stagecoach

Stagecoach warned that its rail operations, including Virgin Trains, were "not immune" to the recession yesterday as it indicated that passenger growth has come to a standstill.

The owner of the South West Trains and East Midlands franchises and co-owner of Virgin Trains reported a softening in demand, with analysts warning that travel on its rail services has barely grown over the winter. Virgin Trains saw a 3.3% drop in passenger numbers on the west coast line in the 10 months to 1 March, but Stagecoach blamed the slump on engineering works rather than Britain's stuttering economy. SWT increased passenger numbers by 1.6% and East Midlands by 2.5% over the same period.

However, Stagecoach admitted that all its rail operations are under pressure from the economic slowdown. Analysts warned that the figures indicated an accelerating decline in passenger growth from November onwards as unemployment and a deepening recession kicked in. Stagecoach's biggest franchise is SWT, which is heavily dependent on commuters.

In yesterday's interim management statement, Stagecoach said it would continue to cut costs - it has already shed more than 820 posts from its rail operations.

Analysts are increasingly bearish on public transport companies but bus operations remain robust - Stagecoach reported a 9% increase in bus revenues over the same 10-month period.

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