As the UK government moves towards the renationalisation of the railways, FirstGroup, the country’s largest rail operator, is strategically reshaping its business to adapt to the changing landscape. Graham Sutherland, the CEO of FirstGroup, is focused on diversification in response to this shift in the industry. Here are some key points to understand FirstGroup’s approach in the face of nationalisation:
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Expanding into Open Access Operators:
- FirstGroup’s strategy to navigate nationalisation includes investing in open access operators. These operators are privately run and operate on public rail lines without competing with established train companies.
- The company already runs two open access services, Lumo and Hull Trains, and has acquired Grand Union to add more routes to its portfolio.
- With applications in place for three additional services, FirstGroup is looking to scale this business further and potentially turn Lumo into a national brand.
- Expanding Bus Business:
- While facing changes in the rail sector, FirstGroup is also eyeing opportunities to expand its bus business.
- The recent acquisition of RATP’s London business, which includes contracts to operate 90 bus routes, marks a strategic move to enter the London bus market.
- The company aims to build a more balanced and diverse portfolio by diversifying its bus services, from park and rides to specialized transportation services.
Gerald Khoo, an analyst at Panmure Liberum, sees these strategic moves as steps towards building a more resilient and profitable business model for FirstGroup. Sutherland envisions doubling the company’s revenues by focusing on growing the open access business and expanding bus operations. This transformation is aimed at reducing dependency on public policy and reshaping FirstGroup for a sustainable future.
In conclusion, FirstGroup’s proactive approach in the face of nationalisation reflects a commitment to adapt and thrive in a changing industry landscape. By diversifying its operations and pursuing growth opportunities in both rail and bus sectors, the company is positioning itself for long-term success.
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