05/12/2012 04:22 GMT | Updated 05/12/2012 04:39 GMT

Stagecoach Announces Strong Results And Hints At Virgin Winning The West Coast Mainline Bid

Transport group Stagecoach delivered a 39% rise in half-year profits thanks to continued strong growth in its regional bus division.

Chief executive Sir Brian Souter also used his results statement to suggest the government was nearing an agreement with Virgin Rail - Stagecoach's business partner - to continue running the West Coast Mainline franchise.

Sir Brian said: "In the UK, we have achieved further growth in our regional bus operations and we continue to make good progress at our contracted London bus business. Passenger revenue growth remains good on our UK rail networks and we have further developed the alliance with Network Rail at South West Trains.

"We are playing an active part in the UK government's review into rail franchising. The private sector has been central to the huge growth of UK rail travel over the past 15 years, and it is important that a sustainable rail franchising programme is restarted as quickly as possible.

"Virgin Rail Group has introduced more than 100 new Pendolino train carriages in recent months, boosting capacity on the West Coast mainline. We look forward to it shortly reaching an agreement with the UK department for transport for the continued operation of West Coast train services."

The bidding process for the new franchise is to be re-run after the government discovered significant technical flaws in the procurement process, scrapping the award of the franchise to FirstGroup and keeping Stagecoach's Virgin Rail joint venture on a temporary contract.

Stagecoach operates around 8,000 vehicles and 2.5 million passengers every day, as well as rail services including South West Trains.

Its overall profits jumped to £123.7 million in the six months to October 31, thanks largely to its commercial bus services, which saw a 1.3% rise in underlying passenger volumes contributing to a 9% profits increase of £87.2 million.

The rail division also performed well, rebounding from a £6.9 million loss a year earlier to report a profit of £22.7 million - due in part to the start of revenue support payments from the Department for Transport on the company's East Midlands franchise.