Shares in rail operator plunge after Southern strike hits profits

Shares (Berlin: DI6.BE - news) in the transport operator behind Southern Rail have plunged after it revealed a profit hit following "lengthy and significant" strike action at the franchise.

Go-Ahead, majority owner of Southern parent company Govia Thameslink Railway (GTR), fell 14% after it published half-year results.

It said earnings from its rail arm fell 35% to £27m while group pre-tax profits slipped 12% to £67m for the six months to the end of December.

"Overall group performance has been significantly impacted by a reduction in rail profitability due to losses from our GTR franchise, as a result of ongoing industrial action on Southern," it said.

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The group also warned that full-year figures from bus and train divisions would be lower than expected, and impacted by uncertainty depending on strike talks as well as negotiations with the Department for Transport over the franchise.

Southern has been involved in a bitter dispute with unions over its proposals for driver-only trains.

Go-Ahead apologised to the hundreds of thousands of customers affected by the dispute who had suffered "months of severe disruption and inconvenience".

Some have reportedly lost their jobs as a result of being unable to get to work.

Go-Ahead's profit fall came after the GTR franchise was left nursing losses in the first half.

GTR passenger journeys fell 3.4% and passenger revenues fell 6.4%.

Chief (Taiwan OTC: 3345.TWO - news) executive David Brown said the franchise, which includes Thameslink, Great Northern and Gatwick Express as well as Southern, had been "challenging from the outset".

He said: "In addition to the inherent challenges of operating this complex franchise, we have faced lengthy and significant industrial relations issues related to the modernisation of working practices required by the contract.

"Our customers have suffered months of disrupted travel, impacting work and family lives and we are sorry that such inconvenience and hardship has been caused.

"Discussions with trade unions are ongoing as we strive to reach a full resolution of these issues."