Stagecoach has entered into agreements to sell the marketing, retail and customer service activities of three of its inter-city coach businesses to ComfortDelGro (CDG).

The deal applies to Stagecoach’s 35% interest in Scottish Citylink Coaches Ltd, a joint venture between Stagecoach and CDG, which markets and retails inter-city coach services in Scotland and between Scotland and England. It also applies to the UK Megabus business and Falcon South-West, which markets and retails tickets for a single coach route between Plymouth, Bristol and Bristol Airport.

It is selling its 35% stake in Scottish Citylink and its intercity coach operations to Braddell Limited, a wholly owned subsidiary of CDG.

The deal is for a consideration of £8.75m and is expected to complete on 28 February 2022.

Stagecoach will continue to provide sub-contracted bus and coach operational services to the inter-city coach operations which will now be owned by CDG. The disposal addresses potential regulatory considerations in respect of the recommended combination with National Express Group plc announced today.

Martin Griffiths, Stagecoach Chief Executive, commented: “Stagecoach developed the Megabus brand in 2003, as we saw real potential in the long-distance inter-city coach market in the UK. In 2005, our belief in this market saw us create a joint venture with CDG to run the Scottish Citylink business and we further expanded our inter-city coach business with the development of our bespoke Falcon service in the South West of England serving Bristol Airport. Through this transaction, Stagecoach ensures that those business will continue to thrive under the ownership of the world renowned CDG brand.”

Profits and losses

For the half-year to 30 October 2021 the marketing, retail and customer service operations of Megabus UK and Falcon had operating losses of £3.9m, and for the full year to 1 May 2021, operating losses were £3.7m. Stagecoach’s share of operating profit in Scottish Citylink for the half-year to 30 October 2021 was £0.1m and for the full year to 1 May 2021 it was an operating loss of £0.4m.

For the full year to 27 April 2019, which was the last full financial year prior to Covid-19, the marketing, retail and customer service operations of Megabus UK and Falcon had operating profit of £0.7m. For that same period, Stagecoach’s share of operating profit in Scottish Citylink was £2.5m.

The gross assets of the marketing, retail and customer service operations of Megabus UK and Falcon as at 30 October 2021 were £0.4m. Stagecoach’s share of the gross assets of Scottish Citylink as at 30 October 2021 was £5.7m.