Stagecoach Return to The London Bus Market

Stagecoach have purchased the East London Bus Group back from Australian investment bank Macquarie, to whom they originally sold the firm in 2005 (making it then the largest independent operator in the UK).

ELBG has been performing worse than Macquarie hoped for some time, something that’s reflected in the tidy profit Stagecoach have made on the deal – Macquarie paid them £263.5m for ELBG in 2005, and Stagecoach have only paid £52m to buy it back.

Macquarie are on record as claiming that the main issue at the firm has been its high cost base, with driver salaries a contributing factor. As a spokesman commented when the prospect of a sale was originally broached back in June:

One of the big issues for the company, is that there is a high cost base. There are a large number of drivers who are the highest paid in London, and by definition in the UK.

The company lost money last year and has budgeted to lose more money, and has to address the cost base, which is something the union is not prepared to address.

Presumably Stagecoach believe that there is room for improvement at the operator in this area or elsewhere.

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