Parent Company of Providence Bus Co., First Student, is in Economic Turmoil
Wednesday, September 26, 2018
First Student, the bus company contracted by the city of Providence to transport thousands of children each day is embroiled in a labor fight with the Teamsters — the two parties have been at an impasse for months and a strike is scheduled for Thursday.
The bus company is owned by British-based transportation giant FirstGroup PLC, and the company has been in near business chaos for the past five months. The company has traded out its CEO, has seen massive losses, and its stock drop by nearly 30 percent in the past year. The U.S. division of the company is located in Ohio.
In May the Guardian reported, “The chief executive of FirstGroup, which runs buses in numerous UK cities and the Great Western, South Western and TransPennine rail franchises, has been ousted after the company slumped to a £326m loss. The troubled Aberdeen-based rail and coach operator, which has said it is exploring options including a sale of the US bus group Greyhound, also said it remained committed to the TransPennine contract despite revealing it would lose more than £110m running the franchise.”
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTIn the Providence dispute, the company has criticized the Teamsters for the management of its pension fund that the bus company says is insolvent, but that the teamsters dispute.
“FirstGroup’s share price fell 11% as investors took fright at the string of bad news and the company’s financial prospects.
The poor performance of the business, which reported a profit of £152m in the previous financial year to the end of March 2017, has cost its embattled chief executive his job,” the Guardian reported.
In part, FirstGroup has been hit hard by declining rail traffic in the UK. In a separate piece published in the Guardian published in June, “The decline in train usage has been pronounced in the first three months of 2018, with 9m fewer journeys from January through to March this year than in the same period in 2017. South Western Railway showed its lowest ever recorded figure for the period, a 7% fall from last year, partly ascribed to industrial action and the adverse weather in February, when the so-called beast from the east swept through Britain.”
“The numbers could spell more grim news for the struggling First Group, which admitted last month that it would lose £106m on its TransPennine Express franchise due to stagnating passenger numbers. It won the South Western franchise last year with a £2.6bn bid that ex-boss Tim O’Toole said was “disciplined," with clauses that reduced its risk should the UK and regional economy hit the buffers after Brexit,” reports the paper.
Further adding to the instability is a host of private equity firms looking to buy FirstGroup with the intention of taking it private and selling off aspects of the business.
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