Go-Ahead steps into US school bus market

Go-Ahead, the bus and rail operator, has formed a joint venture to win yellow school bus contracts in North America, marking its first significant foray outside the UK. It had until now been the only one of the five UK-listed public transport operators to be solely based in Britain.

Go-Ahead will own 50 per cent of the joint venture, with the remainder held by Cook-Illinois, one of the largest school bus fleet operators in the US. It aims to take advantage of the growing trend towards outsourcing by school districts.

Keith Ludeman, Go-Ahead chief executive, said: "We wanted to explore markets with the same language, legal system and operating characteristics and the US school bus market is exactly that."

The deal means that four of the five UK-listed public transport operators - FirstGroup (LSE: FGP.L - news) , National Express (LSE: NEX.L - news) , Stagecoach and Go-Ahead - have bus or coach operations in North America. Arriva, the most diverse of the five, has businesses in 11 European countries, but is yet to make it to the US.

Go-Ahead's venture suggests it may be interested in buying National Express's school business in the US, should its heavily indebted rival sell assets or be broken up. National Express is the second-largest operator in the US school bus market and has been subject to several buy-out proposals since it defaulted on its £1.4bn East Coast rail franchise in the UK in July.

The news came as Sir Moir Lockhead, chief executive of FirstGroup, the biggest US school bus operator, ruled out another bid for National Express. yesterday, saying that the company had "moved on" after its tentative approach was rejected this summer. . FirstGroup said lower sales and higher fuel costs on its Greyhound buses in the US had dragged pre-tax profits down 44 per cent to £30.3m in the six months to the end of September. But it confirmed the UK bus and train market was stabilising. Like-for-like passenger revenue growth on its buses was 2.4 per cent; rail grew 1.7 per cent.