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Stagecoach Share Price Jumps 18% on Government Support for Bus Services

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Updated: 22 July 2020

Shares of Stagecoach Group PLC (LON: SGC) soared nearly 18% on Wednesday on reports that the UK government may extend the funding for bus services.

According to the current scheme, the government will support the bus sector until the end of October, with Stagecoach hinting that talks are ongoing for a further 12-week extension.

Stagecoach bus

The government started the funding scheme in March to help the bus operators survive a period where public transport was not used amid the pandemic. 

“They’re not funding us to make significant profits, but there’s a recognition from government that if they want certain levels of service to operate, then the costs need to be covered,” Stagecoach’s Finance Director Ross Paterson said.

Stagecoach announced that total turnover slipped from £1.88 billion to £1.42 billion for the fiscal year ending May 2. As a result, the adjusted operating profit plunged from £161 million to £119.7 million. 

“Supportive short-term actions by government and our local authority partners have helped protect public transport networks, which are critical to the country. We have also been encouraged by the good momentum created by the positive direction of government bus policy and investment,” the firm said in a trading update. 

Stagecoach added that it experienced a 50% drop in passenger numbers amid the pandemic. The bus services operator witnessed a 10% increase in passenger numbers since the lockdown ended. 

 Stagecoach share price surged higher on the expected continuation of the funding scheme for the bus operators July 2020

Stagecoach share price initially surged nearly 18% higher to trade at 59p, before paring back gains to settle around 54p, up over 7% on the day.