Stagecoach in North America
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1 Stagecoach in North America
2 - 2 - Introduction Stagecoach Group, the leading international transport specialist, manages bus and rail operations in the UK, North America and New Zealand. Stagecoach is a significant player in the highly-fragmented North American transport market where there are several thousand operators. We first entered the North American market in 1999 and, over the past two years, we have restructured our business. Our North American operations are principally scheduled commuter services, although they also include tour and charter, sightseeing and school bus operations. We cover three specific geographic areas: the North East, North Central and Canada and we believe these businesses offer good growth prospects. Our North American portfolio has a proactive culture that puts safety and security at the top of our agenda. Strategy Stagecoach has a very clear strategy for its North American operations, focusing on: Specific geographic areas of North America Organic growth, with small bolt-on acquisitions Robust businesses with predictable revenue streams, including commuter and contract services Development of leisure products with good growth potential Targeted investment to drive growth Strict control of cost base The improving economy in North America is now resulting in a recovery of revenues, particularly in leisure markets, which have significant upside potential. Factfile Annual fleet coverage 109 million miles Vehicles 2,800 Employees 4,600 Figure 1
3 - 3 - Future prospects Stagecoach is committed to achieving further organic growth in its North American operations. Among the initiatives we are looking to progress over the next 12 months as part of our plan to increase operating profits in North America are: Expansion of New York Sightseeing product with the introduction of 20 new open-top double-deckers Further development of our school bus operations Possible introduction of double-decker coaches into the US market for the first time, with potential services around New York and Toronto Addition of London Routemaster buses to sightseeing services in Montreal Location of business operations Figure 2
4 - 4 - Turnover breakdown by sector School Bus and Contract 18% Charter 20% Sightseeing & Tours (incl New York) 16% Scheduled service/line run/commuter 46% Figure 3 Source: Company records for financial year ended 30 April 2004 Turnover breakdown by region The turnover of the continuing parts of the three core North American regions for the financial year ended 30 April 2004 was reported by Stagecoach Group as follows: Year ended 30 April 2004 Turnover $m North East North Central Canada 41.8 Total Figure 4
5 - 5 - Operational overview North East Our North East business covers the states of New York, New Jersey and eastern Pennsylvania. It includes significant commuter and local bus services, express links to Newark Liberty International Airport and other destinations, an Atlantic City casino service, charter business and contract work on behalf of transit authorities and private sector organisations. We also operate New York Sightseeing, which offers the Big Apple s premier sightseeing tours. Stagecoach operates more than 1,000 buses and employs around 2,200 drivers, maintenance and operational staff in the North East region. It includes nine operating companies and one body workshop. More than 9 million passengers a year use our commuter coach services, which operate from New York State and the State of New Jersey to and from New York City. There are 25 routes, many of which serve park and ride locations. These services benefit from express bus lanes and passengers benefit from a modern fleet of coaches. We are looking to extend services to further park and ride sites and add service from points in New Jersey to the rapidly growing Jersey City area. Above: One of the new refurbished commuter coaches serving Jersey City Express coach services operate from New York City to New York State and Pennsylvania, carrying over 1.3 million passengers a year. College and university students account for a large portion of sales and routes serve points close to several major campuses.
6 - 6 - Passengers benefit from a frequent service, often with on-board movies, and there are plans to extend the service to other colleges and universities in New York State. Left: Morning commuter service at a park and ride facility in New Jersey Stagecoach is the biggest provider of sightseeing services in New York City. Some 130 sightseeing products are on offer to tourists, around 40 of which are combined with other attractions. Cross-selling arrangements are in place with many third-party operators, attractions and venues. The peak time for sales is from June to September when an average of 4,300 tickets are sold every day. Passenger volumes have increased by 33% in the six months to 31 October 2004 compared to the same period the previous year. Left: New York Sightseeing is carrying record numbers of Big Apple visitors
7 - 7 - We run city bus services in New Jersey at Newark and Jersey City and these are well-positioned in what are two rapidly developing areas. More than 20 million passengers a year are carried on 12 routes. New routes are being identified as the Jersey City waterfront continues to be developed. There is further potential passenger growth from new housing developments, schools and hotels being built near existing routes. In February 2004, a new integrated route map was developed and mailed to over 100,000 area households. Above and right: Jersey City is becoming the base for many major corporations Around 12% of the North East region s turnover is from stable contract work on behalf of public/private sector clients, including city and state transit authorities, and shuttles for company employees and college/university students. Above: A contract service operated on behalf of the State of New Jersey (NJ Transit) Seventy dedicated charter coaches are maintained in the North East region, with 70% of bookings representing repeat business. Charter coaches are also
8 - 8 - used for other services to maximise the return on the vehicles. A central charter and group tours sales team is in place to drive up bookings. Above: One of the fleet of charter coaches in the North East Newark Liberty Airport Express provides coach services between Newark Liberty International Airport and several key points in midtown and lower Manhattan. The service, which carries around 1,800 passengers a day, competes with trains, shared vans and taxis. Regular services and a free for kids offer allows the Airport Express to maintain a competitive advantage. A partnering arrangement is in place with another operator serving the other two New York City airports to allow integrated transport options between all three airports. Left: Part of the marketing campaign for the Newark Liberty Airport Express
9 - 9 - The North East region s body repair service facility in North Bergen, New Jersey, which has 18 work bays and five painting and preparation bays, handles work from Coach USA companies and third-party operators. Around 25% of business is third-party. North Central The North Central region operates in seven states in the northern Midwest of the United States, serving major cities such as Chicago, Milwaukee, Pittsburgh, Buffalo and Syracuse. There are significant contract and charter operations, as well as sightseeing buses in Chicago, scheduled services to Chicago Airport and a growing school bus business in Milwaukee. Stagecoach operates more than 1,300 vehicles in the North Central region and employs around 1,700 people. There are 10 companies and 18 operating facilities within the region, which covers around 108,000 square miles. More than a third of the North Central region s annual revenue is from stable contract work, including school bus services. More than 40,000 students in Wisconsin are safely transported to and from school every day on a fleet of around 700 dedicated yellow school buses. Left: Stagecoach runs a growing school bus business in Wisconsin
10 The Wisconsin school bus operation is growing and last year saw the successful renewal of $8.7 million in school bus contracts in the state. The North Central region also operates a number of corporate contract shuttle services on behalf of organisations such as Prudential Insurance and Northern Trust and college contract shuttles at the University of Pittsburgh and the University of Buffalo. More than 500,000 visitors travel on our sightseeing buses each year in Chicago. The fleet includes 10 open-top double-decker buses and 45 trolley buses. One of the 45 trolley buses in operation in Chicago Chicago Sightseeing passenger volumes were up 22% in the six months to 31 October 2004 compared to the same period in Over eighteen of our trolleys are under contract to the City of Chicago to provide transportation to additional 1.7 million people annually, in and around the windy city.
11 Left: one of the opentop doubledecker sightseeing buses in Chicago Airport Express scheduled services carry 1.3 million passengers a year, linking the Chicago O Hare and Midway airports with Rockford, Illinois; Gary, Indiana; Madison and Milwaukee, Wisconsin. With the addition of a bolt-on acquisition in Rockford, Illinois, the Airport scheduled service has shown more than a 26% increase in ridership in the six months to 31 October 2004 compared to the same period in In addition, the North Central region operates a growing charter services business throughout the existing seven state markets. While over 75% of the business is repeat business, we have experienced an increase in our sales of over 16% in the six months to 31 October 2004 compared to the same period the previous year.
12 Above: A Coach USA charter service to the popular tourist attraction of Niagara Falls Canada In Canada, we operate in the provinces of Quebec and Ontario, providing services in the main centres such as Toronto, Montreal, Kingston, Niagara Falls and London. Stagecoach employs around 700 people and operates around 400 vehicles in Canada. The division is mainly a mix of scheduled services and charter operations, with additional income from transit, school contracts and sightseeing tours. Toronto and Montreal are the two largest markets in our Canadian business where we operate more than 170 inter-city coaches. These line-run services account for around a third of turnover at Coach Canada. Stagecoach is the biggest operator in the Toronto area with a market share of 25% and is also a major provider of transport services in Montreal. The 365-mile Toronto-Montreal route is a key corridor with potential for further organic growth. Passenger volumes have also been growing on the popular Toronto-Niagara Falls route. In addition, Coach Canada has in place a pool arrangement with Greyhound US on the Toronto-New York City route, operating the Toronto-Buffalo section.
13 Left: One of the fleet of coaches in the Coach Canada division Stagecoach operates around 170 school buses in Canada under contract to local school boards in the Peterborough and Oshawa areas. School bus and coach operations are integrated to ensure a close control of overheads. Contract services are also operated on behalf of authorities in Whitby and Port Hope/Cobourg. Coach Canada operates a significant charter business, with revenues up around 50% in the first six months of the year compared to the same period in 2003 due to an uplift in visitors to the country, particularly from Asia. The Grayline sightseeing operation in Montreal runs a fleet of 10 trams and three double-decker vehicles. Left: A Grayline sightseeing tram in Montreal. Stagecoach Group December 2004
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