Perth-headquartered Stagecoach said that it remained in talks with National Express over a potential deal that would see the latter’s shareholders take a three-quarter stake in the enlarged business.
Releasing its interim results, the Scottish bus group said: “Constructive discussions are continuing with National Express Group on a potential combination of both groups that would deliver strong value creation for both sets of shareholders.”
In September, Stagecoach disclosed that it was in merger talks with its larger rival after more than four decades of operation, raising fears of job losses at the Scots firm.
The company, which was founded in 1980 by Sir Brian Souter and his sister Dame Ann Gloag, confirmed that it was in discussions with National Express over a potential all-share merger.
If the businesses do combine, the new company would control almost a third of the UK's bus market.
Stagecoach said that it had a “positive outlook” regardless of its future direction as a business.
On a statutory basis, pre-tax profit increased nearly six-fold to £31.1 million as passengers started to travel again across the country in the six months to October 30. Turnover totalled £579.4m, up from £454.6m a year earlier.
Passengers were still travelling less than before the pandemic, though. Passenger journeys were last month at 70 per cent of where they were in November 2019, and have dropped a little further because of Storm Arwen and new Covid guidance.
But the business will still be able to rely on government support until next spring, which will help it to keep running services.
Chief executive Martin Griffiths told investors: “We are pleased at the positive progress of the business as confidence in public transport returns and more customers use our bus, coach and tram services.
“This has been achieved as a result of the fantastic commitment of our frontline employees and management teams, combined with our strong partnerships with national and local government, and supportive public policy and investment.
“While the pace of recovery may vary, we are well-placed to deliver on the extensive opportunities beyond the pandemic and on the back of the COP26 climate change conference to attract people out of cars to more sustainable public transport.
“We continue to see a positive outlook for our bus, coach and tram services, whether as a standalone business or as part of a combined future group.
“Greener and smarter public transport is central to delivering government ambitions around decarbonisation, levelling up of communities, driving economic recovery, and securing better health outcomes for citizens,” he added.
In September’s statement to the stock market, Stagecoach said that both boards believe that the potential tie-up would be a “strategically compelling proposition” with the potential for “significant growth and cost synergies”.
A combined group would see National Express utilising Stagecoach's “well-located depot network” to run and maintain its coach operations.