UK's FirstGroup upgrades profit on higher travel demand

LONDON (Reuters) -British transport operator FirstGroup said profit for its current financial year would come in above forecasts, as more people decided to travel on its buses and trains over the last three months.

A government scheme in England to boost local economies by capping bus fares at 2 pounds ($2.39) had helped passenger numbers rise to 83% of their pre-pandemic levels, the company said.

Since COVID-19, transport operators across Britain have struggled to get people back onto buses and trains at previous levels, as lifestyles changed and more people now work from home or shop online instead of going into towns.

But the 2 pound fare scheme, which will run until the end of June, has made it cheaper for people to travel, encouraging demand.

More people than expected were also travelling on two of its rail units, Lumo and Hull trains, which run between London and Edinburgh, and London and Hull, FirstGroup said.

For the 12 months to March 25, FirstGroup guided that profit would be ahead of its previous expectations. Analysts had been expecting adjusted operating profit of 137 million pounds.

Shares in FirstGroup have climbed 10.5% over the last three months, valuing the company at about 765 million pounds.

FirstGroup will report annual results on June 8.

($1 = 0.8370 pounds)

(Reporting by Sarah Young; Editing by Kate Holton)