Yahoo Finance National Express wins £880m Morocco contract to ramp up international growth
National Express Group is set to become the largest public transport operator in Morocco after striking a 15-year, €1bn (£880m) deal to run bus services in three of the country's cities.
The contracts will be served by National Express’s Spain and Morocco-focused Alsa division in partnership with local operator CityBus and will cover 61 routes, carrying 109 million passengers in Rabat, Salé and Temara per year.
Dean Finch, National Express’s chief executive, said the deal would help the company in its strategy of diversifying revenues by focusing on fast-growing urban areas.
But Russ Mould at investment firm AJ Bell warned investors against expecting a big shot in the arm, given the long-term nature of the contract meant it was worth just €66.7m per year.
He added: “While still not an inconsiderable sum, you have to bear in mind this amount is revenue and not profit. As National Express and several of its peers have demonstrated in the past, there are no guarantees on how profitable transport contracts will be.”
The new deal will commence next year and run until 2033, with the option of a seven-year extension.
It will boost the total proportion of revenues National Express generates abroad, which already account for around three quarters of the total.
Having exited its last UK rail franchise last year, the vast majority of the company’s revenues now come from bus and coach services, including more than 21,000 school bus routes in North America. It also runs train services in Germany which account for around 4pc of group sales.
Alsa has been operating in Morocco since 1999 and already has contracts in Tangier, the country’s third-largest city, Marrakesh and Khourigba.
