02/10/2001
Following the tragic events of 11 September 2001, Stagecoach Group, which, through its Coach USA subsidiary, has significant business interests in New York City and across the USA, wishes to express its deepest sympathy with the injured and bereaved, and pledges to back efforts by Mayor Giuliani and all New Yorkers to rebuild the spirit of New York City.
Three weeks after these tragic events, the Group has now been able to evaluate the initial impact of the attack on its North American businesses. While there has been an immediate, short-term impact on revenues it is too early to evaluate the full longer term economic effect on our Coach USA Division or across the Group as a whole.
Coach USA’s North East and New England businesses, those most significantly affected and having operations covering New York City, Newark Airport and Logan Airport in Boston, last year generated approximately $300 million of the Division’s $1 billion revenue, with a mixture of sightseeing, line-run, airport shuttle and charter operations.
The immediate effect of the attack resulted in the loss of one motor coach at the World Trade Centre in lower Manhattan, with no injury to staff or passengers. All sightseeing and commuter services in the New York City area were suspended for up to three days after the emergency. Across the US all our airport related services were suspended pending the re-opening of US airports. In New York State and elsewhere in the US our vehicles were used to assist the rescue and support efforts co-ordinated by public transit and airport authorities.
Since the limited resumption of services from September 17, we have seen a marked downturn in sightseeing passenger numbers in New York City and in airport services from Newark into midtown Manhattan. Commuter services from New Jersey have resumed, and are now recovering. Airport services across the US remain weak in line with current air travel trends.
Consistent with international and domestic business travel and leisure activity we have also seen cancellations and a slowing in bookings in our sightseeing, tour and charter businesses across the US. The loss of this work has been mitigated to some extent by a short term need for additional ground transportation services and in returning dislocated airline passengers home. In addition we have launched a national advertising campaign to increase further the awareness of our Coach USA brand and services and are confident that these businesses will recover in due course.
Our transit and taxi businesses continue to perform well although our small number of airport dependent taxi operations have been impacted in the short term.
We were encouraged by the trading performance of Coach USA in the first four months of this financial year and in July and August the Division as a whole traded significantly ahead of the equivalent months in the prior year. The outlook for September and October, traditionally Coach USA’s strongest trading months given the seasonal nature of the business, was equally positive. However early indications of the financial impact of the disruption to the Coach USA business for the month of September now show an estimated revenue and operating profit shortfall of $15 million and $10 million respectively from our original expectation.
The full potential financial impact on the Stagecoach Group for the year to 30 April 2002 remains uncertain but in light of the above is likely to be material. As a result of an anticipated revenue shortfall for the remainder of the year we are taking action to reduce the cost base of the business including further business restructuring. In the short term, Randall West the new CEO at Coach USA, who was appointed effective 1 September 2001, and his management team will be aggressively pursuing new revenue opportunities on the back of a likely increased demand for ground transportation services. In the longer term, our business strategy remains focused on complementing our charter and sightseeing businesses through continued development of our line-run, contract and transit businesses and integrating small bolt-on acquisitions in our taxi division.
Keith Cochrane, Stagecoach Chief Executive, paid tribute to New Jersey and New York staff at Coach USA and Gray Line New York. "We are all very relieved that there were no casualties among our 2,000 staff in the North East, and we are proud of the contribution they have made to the rescue and recovery effort in Manhattan."
"We have all been shocked by these attacks, and our people are working hard to return to normality. In the meantime, the full economic effect is not yet clear, but I remain convinced that Stagecoach Group’s strong balance sheet and continuing strong cash flows leaves us more able than most to withstand the short-term effects of these events. We will be monitoring the situation closely and will continue to keep shareholders informed on all significant developments as and when appropriate."
