"What if" National Express West Midlands is sold to new owners?

[Kevin_Brum12]

Now that the National Express West Midlands bus strike is on, causing disruption and misery for thousands of bus passengers across the region, is it time to consider some "what if" scenarios that could happen to the National Express bus operation in the West Midlands? One thing I've learned over the years is that change can come rapidly and unexpectedly.

UNITE argue that National Express PLC Is immensely profitable, so should be able to afford to pay its drivers and stuff in the West Midlands bus operation a substantial pay rise. National Express PLC though is a now a group with operations across the globe, with the UK bus and coach operations making a small chunk of its business. It is a much different group to that which brought employee owned West Midlands Travel Limited in 1994. Many of the shareholders of National Express PLC are not based in the UK either and there must be very few shareholders who worked for West Midlands Travel Limited when it was employee owned who still own a shareholding in National Express PLC.

When the then West Midlands Passenger Transport Authority were planning the sell off of West Midlands Travel Limited In the early 1990s, I recall there were stories in the national press saying that it was the most profitable bus company in the world. It was seen to be a big prize for a number of the groups that were being formed at that time and Stagecoach, under Brian Souter, coveted it.

Thirty odd years later:

• While National Express PLC is profitable, its subsidiary that runs buses in Birmingham, the Black Country, Solihull and Coventry West Midlands Travel Limited is heavily dependent on government subsidy to pay its way, thanks to the coronavirus pandemic. This government subsidy will finish at the end of June 2023.
• Patronage was going down before the coronavirus pandemic, thanks to reducing number off concessionary pass users, societal changes like the move to home working and online shopping, coupled with the negative image of buses portrayed by the West Midlands media who are no friends of bus services or bus drivers. Patronage has not rebounded back to the level seen before the pandemic, with only a base load of key workers and those who do not have alternatives to bus is continuing to use the services.
• The bus industry has become reliant on subsidy partly due to the "Do not use Buses" messaging that was propagated by government during some of the pandemic , even when it was still possible to use buses to make essential trips for work or food shopping and where mitigations had been made. There was also negligible messaging by government or health authorities for the measures that were being taken to keep buses clean during the pandemic, to minimise the transmission of the virus.
• The other big bus operating groups that performed during the 1980s and 90s privatisations are also restructuring and are not all are in a strong position. Arriva have disposed of a number of unprofitable operations and Deutsche Bahn would like to dispose of its English patient. First has retrenched, selling off unprofitable operations to smaller companies or as in the case of Southampton closing them and there is a possibility of a demerger taking place of the UK and US operations in the future. Stagecoach is under new private equity management, Brian Souter having retired. Stagecoach have of course commenced the operation of TfWM tendered services in the Birmingham area for the first time.  Go-Ahead have expanded in some parts of the country but have cut services in their North East heartland and are also privately owned and no longer a PLC.

So where does this leave National Express West Midlands, aka West Midlands Travel Limited?

I think, in a very bad position. I would not be surprised to see if the strikes drag on for weeks West Midlands Travel Limited were put up by National Express PLC for disposal, probably to some private equity/venture capital outfit who might want to take advantage of the fact that West Midlands Travel Limited thanks to the way it was privatised in the early 90s has a near monopoly position in the West Midlands and a captive market. West Midlands Travel Limited also has its garages inherited from the old PTE days. Buses have to be housed and maintained somewhere, but the likes of Acocks Green and Yardley Wood garages as well as Birmingham Central are prime pieces of real estate ripe for redevelopment . It could be that the real estate proves to be the most attractive asset, with a smaller bus fleet being operated from fewer depots that are more spread out.

If private equity did come in with an asset stripping and profit maximising agenda, I reckon it may end up being bad news for WMT staff and bus passengers in the West Midlands. Just like some operators have done around the country already, any new brooms will come in and cut things down to main corridors only with the extensive network that we've got in the West Midlands at the moment being severely pruned. It could mean that large parts of Birmingham and the Black Country end up with next to no buses. You only have to look at First Potteries or First South Yorkshire to see how grim that would be for the people of the West Midlands. Network cuts also mean fewer buses , fewer drivers needed to drive them, fewer staff needed to maintain them and ultimately job losses. As Compulsory Redundancy is often based on last in first out any redundancy pots for staff who were dismissed on Compulsory Redundancy grounds would be minimal and would only tide you over for a short length of time. It certainly would not be enough to enable someone to set up their own small bus company, like many PTE managers and drivers did with their redundancy money in the mid 1980s!!!

Private equity is also not known for long term investment in businesses. Macquarie, when it bought the London bus operations of Stagecoach had to invest, because of London regulation underneath to keep securing contracts for TfL the only way you can do that is by continually investing in upgrading your fleet to TfL's latest spec. Would a private equity owner of West Midlands travel Limited do that, in a different environment to London? Or they put in the minimum investment they could get away with in order to maximise returns of any future sale, because they were taking a short term view of just a couple of years rather than the long term view of 10 to 15 years?  In other words, no regular large scale fleet renewal.

The future for National Express West Midlands is very uncertain and I can see it being cut adrift fairly quickly if the strikes go on and on. And we may well find we'd rather have the devil we know than the devil we don't!

[winston]

NXWM doesn't have the assets it once held: 

Birmingham Central garage was sold for re-devolpment in 2019: 
https://www.birminghammail.co.uk/news/business/regeneration-plans-national-express-site-16064400

Yardley Wood & West Bromwich garages were also sold & leased back, there may well be others:
https://www.thebusinessdesk.com/westmidlands/news/2038300-bus-depot-snapped-up-in-6.8m-deal

An increasing number of the fleet are also leased. 

I can't see NX Group putting NXWM for sale on the back of the strike action. There could well be a change in senior management though, if failings have led to the strike action or Group may look to bring in new blood to re-build management & staff relations. 

As it stands, NX Group themselves may well become takeover targets, their shares hit new lows today with the Mkt Cap now down to £730 million.

[Stevo]

If TfWM moves towards a franchised network routes will be offered for tender, as in Manchester and Merseyside, and there is no guarantee that NXWM will win those contracts. Stagecoach's move into the area may well be a prelude to tendering for the route network. So the future for NXWM looks a bit rocky, which in many ways is a pity.

[metrocity]

NXWM doesn't have the assets it once held:

Birmingham Central garage was sold for re-devolpment in 2019:
https://www.birminghammail.co.uk/news/business/regeneration-plans-national-express-site-16064400

Yardley Wood & West Bromwich garages were also sold & leased back, there may well be others:
https://www.thebusinessdesk.com/westmidlands/news/2038300-bus-depot-snapped-up-in-6.8m-deal

An increasing number of the fleet are also leased.

I can't see NX Group putting NXWM for sale on the back of the strike action. There could well be a change in senior management though, if failings have led to the strike action or Group may look to bring in new blood to re-build management & staff relations.

As it stands, NX Group themselves may well become takeover targets, their shares hit new lows today with the Mkt Cap now down to £730 million.

The potential prospect of bus franchising in the West Midlands is also a risk to any potential buyer. The current West Midlands bus business of NX could be 'confiscated' without compensation overnight as we have seen in Manchester with other operators recently

[B61 ANDREW]

• The bus industry has become reliant on subsidy partly due to the "Do not use Buses" messaging that was propagated by government during some of the pandemic , even when it was still possible to use buses to make essential trips for work or food shopping and where mitigations had been made. There was also negligible messaging by government or health authorities for the measures that were being taken to keep buses clean during the pandemic, to minimise the transmission of the virus.

Up to a couple of weeks ago, the electronic timetable my local bus station was still advising passengers 'only to travel if absolutely necessary' . . . . . . 

[Stu]

Now that the National Express West Midlands bus strike is on, causing disruption and misery for thousands of bus passengers across the region, is it time to consider some "what if" scenarios that could happen to the National Express bus operation in the West Midlands? One thing I've learned over the years is that change can come rapidly and unexpectedly.

UNITE argue that National Express PLC Is immensely profitable, so should be able to afford to pay its drivers and stuff in the West Midlands bus operation a substantial pay rise. National Express PLC though is a now a group with operations across the globe, with the UK bus and coach operations making a small chunk of its business. It is a much different group to that which brought employee owned West Midlands Travel Limited in 1994. Many of the shareholders of National Express PLC are not based in the UK either and there must be very few shareholders who worked for West Midlands Travel Limited when it was employee owned who still own a shareholding in National Express PLC.

When the then West Midlands Passenger Transport Authority were planning the sell off of West Midlands Travel Limited In the early 1990s, I recall there were stories in the national press saying that it was the most profitable bus company in the world. It was seen to be a big prize for a number of the groups that were being formed at that time and Stagecoach, under Brian Souter, coveted it.

Thirty odd years later:

• While National Express PLC is profitable, its subsidiary that runs buses in Birmingham, the Black Country, Solihull and Coventry West Midlands Travel Limited is heavily dependent on government subsidy to pay its way, thanks to the coronavirus pandemic. This government subsidy will finish at the end of June 2023.
• Patronage was going down before the coronavirus pandemic, thanks to reducing number off concessionary pass users, societal changes like the move to home working and online shopping, coupled with the negative image of buses portrayed by the West Midlands media who are no friends of bus services or bus drivers. Patronage has not rebounded back to the level seen before the pandemic, with only a base load of key workers and those who do not have alternatives to bus is continuing to use the services.
• The bus industry has become reliant on subsidy partly due to the "Do not use Buses" messaging that was propagated by government during some of the pandemic , even when it was still possible to use buses to make essential trips for work or food shopping and where mitigations had been made. There was also negligible messaging by government or health authorities for the measures that were being taken to keep buses clean during the pandemic, to minimise the transmission of the virus.
• The other big bus operating groups that performed during the 1980s and 90s privatisations are also restructuring and are not all are in a strong position. Arriva have disposed of a number of unprofitable operations and Deutsche Bahn would like to dispose of its English patient. First has retrenched, selling off unprofitable operations to smaller companies or as in the case of Southampton closing them and there is a possibility of a demerger taking place of the UK and US operations in the future. Stagecoach is under new private equity management, Brian Souter having retired. Stagecoach have of course commenced the operation of TfWM tendered services in the Birmingham area for the first time.  Go-Ahead have expanded in some parts of the country but have cut services in their North East heartland and are also privately owned and no longer a PLC.

So where does this leave National Express West Midlands, aka West Midlands Travel Limited?

I think, in a very bad position. I would not be surprised to see if the strikes drag on for weeks West Midlands Travel Limited were put up by National Express PLC for disposal, probably to some private equity/venture capital outfit who might want to take advantage of the fact that West Midlands Travel Limited thanks to the way it was privatised in the early 90s has a near monopoly position in the West Midlands and a captive market. West Midlands Travel Limited also has its garages inherited from the old PTE days. Buses have to be housed and maintained somewhere, but the likes of Acocks Green and Yardley Wood garages as well as Birmingham Central are prime pieces of real estate ripe for redevelopment . It could be that the real estate proves to be the most attractive asset, with a smaller bus fleet being operated from fewer depots that are more spread out.

If private equity did come in with an asset stripping and profit maximising agenda, I reckon it may end up being bad news for WMT staff and bus passengers in the West Midlands. Just like some operators have done around the country already, any new brooms will come in and cut things down to main corridors only with the extensive network that we've got in the West Midlands at the moment being severely pruned. It could mean that large parts of Birmingham and the Black Country end up with next to no buses. You only have to look at First Potteries or First South Yorkshire to see how grim that would be for the people of the West Midlands. Network cuts also mean fewer buses , fewer drivers needed to drive them, fewer staff needed to maintain them and ultimately job losses. As Compulsory Redundancy is often based on last in first out any redundancy pots for staff who were dismissed on Compulsory Redundancy grounds would be minimal and would only tide you over for a short length of time. It certainly would not be enough to enable someone to set up their own small bus company, like many PTE managers and drivers did with their redundancy money in the mid 1980s!!!

Private equity is also not known for long term investment in businesses. Macquarie, when it bought the London bus operations of Stagecoach had to invest, because of London regulation underneath to keep securing contracts for TfL the only way you can do that is by continually investing in upgrading your fleet to TfL's latest spec. Would a private equity owner of West Midlands travel Limited do that, in a different environment to London? Or they put in the minimum investment they could get away with in order to maximise returns of any future sale, because they were taking a short term view of just a couple of years rather than the long term view of 10 to 15 years?  In other words, no regular large scale fleet renewal.

The future for National Express West Midlands is very uncertain and I can see it being cut adrift fairly quickly if the strikes go on and on. And we may well find we'd rather have the devil we know than the devil we don't!

Hi @Kevin_Brum12, are you the same Kevin that wrote a couple of articles for my WMBU website?

Would you mind if I published this as an opinion piece on my site?

[Ginger66]

Now that the National Express West Midlands bus strike is on, causing disruption and misery for thousands of bus passengers across the region, is it time to consider some "what if" scenarios that could happen to the National Express bus operation in the West Midlands? One thing I've learned over the years is that change can come rapidly and unexpectedly.

UNITE argue that National Express PLC Is immensely profitable, so should be able to afford to pay its drivers and stuff in the West Midlands bus operation a substantial pay rise. National Express PLC though is a now a group with operations across the globe, with the UK bus and coach operations making a small chunk of its business. It is a much different group to that which brought employee owned West Midlands Travel Limited in 1994. Many of the shareholders of National Express PLC are not based in the UK either and there must be very few shareholders who worked for West Midlands Travel Limited when it was employee owned who still own a shareholding in National Express PLC.

When the then West Midlands Passenger Transport Authority were planning the sell off of West Midlands Travel Limited In the early 1990s, I recall there were stories in the national press saying that it was the most profitable bus company in the world. It was seen to be a big prize for a number of the groups that were being formed at that time and Stagecoach, under Brian Souter, coveted it.

Thirty odd years later:

• While National Express PLC is profitable, its subsidiary that runs buses in Birmingham, the Black Country, Solihull and Coventry West Midlands Travel Limited is heavily dependent on government subsidy to pay its way, thanks to the coronavirus pandemic. This government subsidy will finish at the end of June 2023.
• Patronage was going down before the coronavirus pandemic, thanks to reducing number off concessionary pass users, societal changes like the move to home working and online shopping, coupled with the negative image of buses portrayed by the West Midlands media who are no friends of bus services or bus drivers. Patronage has not rebounded back to the level seen before the pandemic, with only a base load of key workers and those who do not have alternatives to bus is continuing to use the services.
• The bus industry has become reliant on subsidy partly due to the "Do not use Buses" messaging that was propagated by government during some of the pandemic , even when it was still possible to use buses to make essential trips for work or food shopping and where mitigations had been made. There was also negligible messaging by government or health authorities for the measures that were being taken to keep buses clean during the pandemic, to minimise the transmission of the virus.
• The other big bus operating groups that performed during the 1980s and 90s privatisations are also restructuring and are not all are in a strong position. Arriva have disposed of a number of unprofitable operations and Deutsche Bahn would like to dispose of its English patient. First has retrenched, selling off unprofitable operations to smaller companies or as in the case of Southampton closing them and there is a possibility of a demerger taking place of the UK and US operations in the future. Stagecoach is under new private equity management, Brian Souter having retired. Stagecoach have of course commenced the operation of TfWM tendered services in the Birmingham area for the first time.  Go-Ahead have expanded in some parts of the country but have cut services in their North East heartland and are also privately owned and no longer a PLC.

So where does this leave National Express West Midlands, aka West Midlands Travel Limited?

I think, in a very bad position. I would not be surprised to see if the strikes drag on for weeks West Midlands Travel Limited were put up by National Express PLC for disposal, probably to some private equity/venture capital outfit who might want to take advantage of the fact that West Midlands Travel Limited thanks to the way it was privatised in the early 90s has a near monopoly position in the West Midlands and a captive market. West Midlands Travel Limited also has its garages inherited from the old PTE days. Buses have to be housed and maintained somewhere, but the likes of Acocks Green and Yardley Wood garages as well as Birmingham Central are prime pieces of real estate ripe for redevelopment . It could be that the real estate proves to be the most attractive asset, with a smaller bus fleet being operated from fewer depots that are more spread out.

If private equity did come in with an asset stripping and profit maximising agenda, I reckon it may end up being bad news for WMT staff and bus passengers in the West Midlands. Just like some operators have done around the country already, any new brooms will come in and cut things down to main corridors only with the extensive network that we've got in the West Midlands at the moment being severely pruned. It could mean that large parts of Birmingham and the Black Country end up with next to no buses. You only have to look at First Potteries or First South Yorkshire to see how grim that would be for the people of the West Midlands. Network cuts also mean fewer buses , fewer drivers needed to drive them, fewer staff needed to maintain them and ultimately job losses. As Compulsory Redundancy is often based on last in first out any redundancy pots for staff who were dismissed on Compulsory Redundancy grounds would be minimal and would only tide you over for a short length of time. It certainly would not be enough to enable someone to set up their own small bus company, like many PTE managers and drivers did with their redundancy money in the mid 1980s!!!

Private equity is also not known for long term investment in businesses. Macquarie, when it bought the London bus operations of Stagecoach had to invest, because of London regulation underneath to keep securing contracts for TfL the only way you can do that is by continually investing in upgrading your fleet to TfL's latest spec. Would a private equity owner of West Midlands travel Limited do that, in a different environment to London? Or they put in the minimum investment they could get away with in order to maximise returns of any future sale, because they were taking a short term view of just a couple of years rather than the long term view of 10 to 15 years?  In other words, no regular large scale fleet renewal.

The future for National Express West Midlands is very uncertain and I can see it being cut adrift fairly quickly if the strikes go on and on. And we may well find we'd rather have the devil we know than the devil we don't!

I commented on the strike page how Unite use the corporate body as the money when Unite are trying to get a decent pay for NX and using the same tactic for Arriva North West.   But if look closely at companies house most of Arriva's accounts have not been filed to companies houses.   So it doesn't look plain sailing for any bus company at the moment.    

I think 2023/24 will be interesting on bus sector as operators will be watching closely as what the other is doing and bosses will be thinking do we move into this area with a cheeky bid or do we call it a day.

We know Diamond tried axing routes that are not profitable and backed down after reassessing situation but still ended up losing one route that is making loses. But I can see buses.

We local authorities look at other methods of transport such as more tram lines but this could lead to anger if roads are dug up as it will cause delays around areas .

We know AS the midlands mayor is interested in reopening old stations is this another way forward to get people out of car and back using public transport.

[ALX4555]

New to This forum: Here I go!

I grew up travelling on the busses, and I've watched them go from Good, to Bad, To Pretty Rubbish.

I love national express West Midlands, and I travel on my local bus, the 15 (Wolverhampton-Merry hill) every weekend. But I've noticed It is always 5+ Mins late, sometimes no bus at all. The timetable has been cut, and its way worse than it was pre-pandemic. And when I go further afield on the busses, I've noticed the same thing. My nan will not stop complaining about the 529 being late   .

I Think the selling of Birmingham Central is an abomination, given its history. And The idea that a company should take over and reduce services is also awful, considering I know how much my family relies on the busses.

However, If having a different bus company (Stagecoach, Arriva or any other) Means that services will be restored to pre pandemic levels (Which would be Extremely hard) then I'm willing to give them a go, Because no matter how much I love the Red-White Tridents, Or the Comfort of the platinum's, I have to accept that the service is absolutely Dismal

Additionally, Unite should Accept NXWM's Pay offer and move on with life, as NXWM makes up very little of The company's profits. national express covered most of the trains in North-Rhein Westphalia (Western Germany) when I was last there, and I know they have other operations elsewhere. I think unite should stop, before they end up with NXWM in serious financial trouble. 

[don]

If franchising occurs I think NXWM (or TWM if you prefer), with their depth of local knowledge, would have to be very unfortunate (or careless) if they didn't win the majority of tenders, unless some of the big boys come in with bargain basement bids which may result in them having difficulty delivering (rather like Stagecoach earlier in the year). That would not auger well for the delivery of the service. 

[Westy]

If franchising occurs I think NXWM (or TWM if you prefer), with their depth of local knowledge, would have to be very unfortunate (or careless) if they didn't win the majority of tenders, unless some of the big boys come in with bargain basement bids which may result in them having difficulty delivering (rather like Stagecoach earlier in the year). That would not auger well for the delivery of the service.

We remember Arriva's operation in Wednesfield. 

They apparently had ex Nx staff working for them, who supposedly knew the patch.

They tried out a few routes without lasting success. 

Where are they now?

[2900]

i personally believe the franchising that's happened in GREATER MANCHESTER will happen in WEST MIDLANDS only a matter of time, if the powers that want a truly integrated public transport system it needs come under one umbrella

[BusDriverBosh]

I think it may happen in time, just like London. So the council will own all the routes, then sub the routes out to the companies

[BBS]

I think it may happen in time, just like London. So the council will own all the routes, then sub the routes out to the companies

TFWM should at least give the West Midlands smaller operators a chance to operate larger routes though, for example Landflight who has great potential can operate a route which benefits them and TFWM

[MW]

TFWM should at least give the West Midlands smaller operators a chance to operate larger routes though, for example Landflight who has great potential can operate a route which benefits them and TFWM

All operators have a chance of winning routes. They get awarded to whoever can operate at the lowest cost.

[BBS]

All operators have a chance of winning routes. They get awarded to whoever can operate at the lowest cost.

Diamond seems like to go to option however