FirstGroup Sells North Devon Bus Operations To Stagecoach For GBP2.8M

[whole diary]

[TerminalJunkie]

Just seen on Twitter:

First is to close its Barnstaple bus operation in Devon after failing to sell the business to Stagecoach. More details in our next issue.

[TerminalJunkie]

First Group statement: http://www.firstgroup.com/ukbus/devon_cornwall/travel_news/news_initiatives/?item=6551&conf=0

[grahame]

Some elements from the statement which I find informative:

We are confident, however, of future successful transactions in the coming months as a number of potential bidders exist in the markets where we have identified other businesses for disposal.'

... where we had a uniquely high degree of overlap with Stagecoach ...

The statement tells us that some 10 routes / 30 vehicles are effected. The only paragraph which mentions the effect on customers :

Giles Fearnley, FirstGroup Managing Director, UK^▸ (United Kingdom) Bus, said: "We understand that this news will be distressing for employees affected by the decision and that it will similarly cause our customers in the area some concern. We apologise and will be supporting affected employees over the coming months, as well as working with Devon County Council on the future of bus services in the area. We will give customers ample notice of the date that services will cease to operate in North Devon.

[6 OF 2 redundant adjunct of unimatrix 01]

So the merger was stopped to keep competition, but the result was one company pulling out resulting in no competition and job cuts..... Makes sence 

[JayMac]

I agree with you relex. Does rather seem like First Group are throwing their toys out of the pram.

Why were Stagecoach willing to take over the routes and continue operating them if they weren't commercially viable?

Stagecoach, it appears, were willing to take over but were prevented from doing so by the Competition Commission. That, to me, shows there is a commercial profit to be made from the routes, else why would Stagecoach be interested?

Unless of course they were interested merely in the assets.

I can sort of understand First Group wishing to dispose of this isolated operation in North Devon, but it seems that their reasons for now doing so, following the failure of the sale to Stagecoach, don't quite ring true. I have every sympathy for the 'Devon Red' staff in Barny who now face redundancy. Bet you weren't expecting this when you agreed to the management buyout by First.

Devon County Council have been strangely quiet on this matter. Will they be looking to tender the routes First Group are giving up?

[TerminalJunkie]

Stagecoach, it appears, were willing to take over but were prevented from doing so by the Competition Commission.

Actually, Stagecoach withdrew before the Competition Commission had time to start to investigate, much less come to any decision on it.

Devon County Council have been strangely quiet on this matter. Will they be looking to tender the routes First Group are giving up?

Luckily, we now have the North Devon Public Transport Users Group for that sort of thing:

John Gulliver from the North Devon Public Transport Users said the Bideford to Barnstaple route was probably one of the busies [sic] in the county.

If by 'busies[t]' he means 'the greatest number of half-empty buses trundling along', then he's probably correct. It used to be the most profitable bus route in North Devon, but that was when there were two buses an hour, not the ten we get now (but not for much longer!).

[Southern Stag]

Because there is so much duplication between Stagecoach and First if Stagecoach had taken over there probably would have been cuts to services. There would be no point maintaining the same artificially high frequency on some of the routes.

[6 OF 2 redundant adjunct of unimatrix 01]

Stagecoach announced today (25 July 2012) that it is to launch an expanded bus network in Devon in September, providing new services and creating a small number of additional jobs.

http://www.stagecoach.com/media/news-releases/2012/2012-07-25.aspx?sc_lang=en


Sent from my iPhone

[JayMac]

Al least there should be some jobs available to the soon to be redundant First drivers thanks to this expansion by Stagecoach.

[6 OF 2 redundant adjunct of unimatrix 01]

Well just shows how silly this competition crap is, as now wanted routes have just been cherry picked! Mind you IMHO^▸ (in my humble opinion) passengers will be better off.... There is a reason I'm proud of working for who I do

[JayMac]

Lets see if I've got this right....

The OFT were planning to refer Stagecoach's buyout of First Bus' North Devon operations to the Competition Commission over worries that a monopoly would exist. Yet didn't First have a monopoly on commercial routes in this area until recent years?

Because of the OFT decision to refer, Stagecoach withdrew their offer, First are closing their operation and Stagecoach are now planning to operate similar routes as the those abandoned by First. So the OFT have, through that decision to refer, actually ended up creating a situation that they wanted to avoid - one operator having a monopoly. Slightly incompetent of them I'd say.

If they'd let the Stagecoach takeover go ahead more jobs would've been safeguarded as First North Devon staff would've transferred to Stagecoach and been afforded many protections under TUPE^▸ (The Transfer of Undertakings (Protection of Employment) Regulations 2006.) legislation. Obviously future rationalisation by Stagecoach may have led to job losses down the road, but at least in the short term all First staff would've transferred to the new employer relatively seemlessly and would have had a better chance of securing their job long term than the situation they now face of redundancy and needing to apply for a job with Stagecoach. Or having to relocate to remain a First employee. Both less enticing prospects than TUPE.

Then there's the benefit to passengers of a seemless takeover. They'd know the bus services they currently use would continue, again, at least in the short-term. Now though passengers in North Devon face uncertainty. One operation is closing, and a new one is opening. That won't be seemless; timetables/frequencies may be different, fare structures will almost certainly be different and routes may well change.

There's also the impact on First Group. Their UK^▸ (United Kingdom) bus division is struggling a bit at the moment and there is rumoured to be a list of First Bus operations they are looking to dispose of. They are now no longer getting ^2.8 million from the sale of the North Devon operation and will be paying out a fair whack in redundancy payments. That loss may well have a knock on impact, with First looking to further cut back in other areas (Taunton? Yeovil? Weymouth?)or add to their list of 'for sale' operations.

All in all a very poor decision by the OFT, who've failed to look at the bigger picture. They weren't so worried when First took over Trurorian in Cornwall. A bit inconsistent, but not unusual for civil servants and their political masters.

[Worcester_Passenger]

There's also the impact on First Group. Their UK^▸ (United Kingdom) bus division is struggling a bit at the moment and there is rumoured to be a list of First Bus operations they are looking to dispose of.

For "there is rumoured to be a list" read "there is a list".

[JayMac]

Indeed there is. Although First weren't happy that details were leaked. Worried about commercial sensitivity....

http://www.passengertransport.co.uk/2012/06/first-seeks-buyers-for-seven-bus-operations/

^At this point, we are not disclosing any more details about our plans for commercial reasons and to ensure that we are able to fully consult with any employees and other stakeholders that may be affected.^

For 'stakeholders' read 'shareholders'. 

[LiskeardRich]

There's also the impact on First Group. Their UK^▸ (United Kingdom) bus division is struggling a bit at the moment and there is rumoured to be a list of First Bus operations they are looking to dispose of. They are now no longer getting ^2.8 million from the sale of the North Devon operation and will be paying out a fair whack in redundancy payments. 

could they recoup some of the 2.8m by selling some of their no longer required north devon assets to stagecoach?
Could they get out of redundancy pay outs if they arrange new employment for their drivers with other companies i.e. Stagecoach?
All though not the original take over, selling the assets and arranging employment for their staff following their closure, may have the same effect as sale of business, without the TUPE^▸ (The Transfer of Undertakings (Protection of Employment) Regulations 2006.) process for staff, and the competition commisioner getting in the way.

[Worcester_Passenger]

could they recoup some of the 2.8m by selling some of their no longer required north devon assets to stagecoach?
Could they get out of redundancy pay outs if they arrange new employment for their drivers with other companies i.e. Stagecoach?
All though not the original take over, selling the assets and arranging employment for their staff following their closure, may have the same effect as sale of business, without the TUPE^▸ (The Transfer of Undertakings (Protection of Employment) Regulations 2006.) process for staff, and the competition commisioner getting in the way.

Alas, that'd still have to be referred to the Competition Commission.