Nottingham City Transport has reported a loss of almost £1 million after being hit by a “poisonous cocktail” of rising gas prices caused by the war in Ukraine and long-last impacts from the Covid pandemic.
The company has increased its fare prices, with the anticipation it will become profitable again by the end of March 2025.
It first hit problems in March 2020, when the country was ordered into lockdown amid the coronavirus pandemic.
Before this, multiple award-winning NCT says one million passengers were using its services every week, the highest use per head of population outside London and Brighton.
But at the height of lockdown usage plummeted to 10 per cent of that figure.
Towards the end of June 2020, the Government encouraged bus companies to reinstate services, propped up by grants.
Nottingham City Transport managing director Dave Astill said:
“The Government continues to support the industry but the other unforeseen factor was war in Europe which no one anticipated,” he said.
“Half our fleet now runs on biogas. We are a green operator, half the fleet meets the ultra-low emissions standard.
“But nobody saw the price of gas trebling. You do things with the best intentions, then something like that happens.
“It was a poisonous cocktail, really. That all explains why we made the loss that we did last [financial] year.
“It was a loss, but it was about a minus two per cent margin, so manageable within our cash reserves, but in the medium to long-term that is not sustainable.”
NCT was established as an arms-length Nottingham City Council company in 1986, and through this arrangement the authority receives a small dividend.
The company is not profit-driven, and typically aims for a profit margin between five and eight per cent each year, with much of this going back into services.
Mr Astill says it has been “financially well-managed for 20 years and before.”
According to documents published on Companies House, NCT made post-tax profits of £4.3m in the 52 weeks to March 28, 2020, before the pandemic.
In the next 52-week period, up to March 27, 2021, post-tax profits dropped to £1.5m.
The following year, up to March 26, 2022, NCT reported a post-tax loss of £416,000.
Up to and including the 2021/22 financial year, NCT says at an operational level its revenue had been matching its costs.
However, in the 2022/23 financial year, which ended in March, the loss increased to “just shy” of £1m on a turnover of £55m.
NCT is plannning on increasing its average bus fare by 9.6 per cent, which is below the current inflation rate of 10.1 per cent.
A standard single will rise from £2.50 to £2.80, for example, while an adult all day ticket will rise from £4.70 to £5.20.
However the £2 adult single ticket offer, which is funded by the Government, will remain in place until the end of October.
The rising prices are “an important factor” in helping NCT break even, the company says, alongside fuel prices falling back in line.
Patronage is now at 88 per cent, up 13 per cent over the previous year.
“Our target this year is to break even and back into profit in 2024/25,” Mr Astill said when questioned over any potential cuts to services in the future.
“Patronage is still coming back, we are up 13 per cent on the same time last year, so things are returning to normal slowly.
“What we are not quite sure of yet is what the new normal is.
“I am confident without being blasé about it, because we are a commercial business.
“We have been doing this a long, long time and we have the expertise within the business to tailor our network to the demand that is there.
“We might be a bit smaller, I don’t know, but I believe we can be a commercial business.
“Our network and our patronage is large enough to sustain a commercial business, even if we are at 90 per cent of what we were back in 2019.”
• £2 bus fare cap extended to this October and £2.50 until November 2024
• Nottingham City Transport bus fares increase by 9.6% and 17% for a single
