The transportation corporation Stagecoach is returning to London bus transit by acquiring a company it sold in 2006 at around 20 per cent of what it received. Stagecoach sold their London bus operations for about £265 million and is now buying them back for around £53 million.
Although London bus market profits are not what they once were, Stagecoach believes that they know how to turn around the profitability of East London Bus and see a fair margin for its efforts beginning in 2012.
East London Bus represents about 15 per cent of the bus transport market in the city. Price, of course, has everything to do with the deal. After all, paying £53 million for a company you sold at £265 million is a fire sale. East London current runs 1400 buses from 10 depots. There is no word yet on how and if service and routes will be affected by the acquisition.
East London Bus saw a steep drop in profits before entering administration. Stagecoach says the problems with East London were apparent to them and they have a particular strategy that they believe will turn things around speedily.
The capital outlay to acquire East London Bus is no problem for Stagecoach, as they are drawing on about 15 per cent of their undrawn facilities.
Stagecoach, for its part seems to be happy to be back in the London bus business, especially with such a bargain buy. Representatives say that it is a bit like coming home again and that their previous experience in the city gives them a big advantage over any operation that would be a total up start.