Home Latest News FirstGroup may stop trading activities amid virus disruption

FirstGroup may stop trading activities amid virus disruption

by Jonathan Adams
trading

The stock price of the company fell by more than 20 per cent on 8 July 2020, recording a decline of more than two-thirds since February 2020

On 7 July 2020, FirstGroup declared that it could stop its trading activities because Coronavirus has badly disrupted its business operations.

The company has incurred a loss of £300 million for its financial year ending 31 March 2020. Hence there is a ‘material uncertainty’, casting doubt on whether to continue to operate or not. This is despite the fact that the company’s long-term fundamentals are still reasonably fine.

The stock price of the company fell by more than 20 per cent on 8 July 2020, recording a decline of more than two-thirds since February 2020.

The lockdown announced by the British Government to stop the transmission of Coronavirus has forced people to stay indoors, impacting the transportation sector in a big way. The operator has received emergency funding to continue operating, but it cannot be predicted as to how the crisis would further impact the transportation services.

The FirstGroup PLC aims to sell its US bus operations.

The Office for Rail and Road, UK, recently published a report stating the quarterly statistics of passengers’ rail usage in Great Britain. The report covers the scenario before the pandemic and immediately after the lockdown was announced when people were not allowed to move out of their houses.

The report is divided into four parts- passenger journey, passenger kilometres, passenger revenue, and passenger train kilometres.

The Office for National Statistics, UK, published a report in June 2020 which shared the latest available quarterly bus statistics for Great Britain during January to March 2020. The report covers local bus passenger journeys and fares.

There was a decrease of 4.3 per cent to £4.59 billion in the number of local bus passenger journeys in Q1 2020 in comparison with the numbers of Q4 2019. In the year to March 2020, local bus fares increased by 2.6 per cent, faster than the all-items Consumer Prices Index rate of inflation (1.5 per cent). However, these numbers reflect the data for only one week of lockdown, which was imposed on 23 March 2020. The data for Q2 2020 is expected to showcase a much sharper drop in bus travel statistics.

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