FirstGroup's return to London bus market sparks debate over public transportation funding

In December 2024, FirstGroup, a transport group based in Aberdeen, is preparing to re-enter the London bus market with a significant acquisition. The company has reached an agreement valued at £90 million to acquire RATP Dev Transit London, which will grant them a 12 percent share of the market. As part of this takeover, FirstGroup plans to assume control of four owned and six leased depots situated in Central and West London, alongside a fleet of approximately 1,000 buses and a workforce of about 3,700 employees. Notably, more than 80 percent of these employees are drivers, indicating a substantial operational presence in the city. This acquisition comes after FirstGroup divested a large portion of its First London operations to Go-Ahead in 2013. By ramping up its bus and coach company acquisitions in 2024, which include firms such as Anderson Travel and York Pullman, FirstGroup aims to bolster its position in light of the Labour Party's proposals for the nationalisation of English passenger railway franchises. The UK government has outlined intentions to take several rail franchises into public ownership as their contracts expire, leaving some franchises, like FirstGroup's Avanti West Coast, unaffected for now. The takeover of RATP London is expected to be completed by the first half of the year 2025, pending approval from Transport for London and French authorities. FirstGroup has allocated £45 million from its cash reserves and will also assume liabilities from RATP London's asset-backed vehicle finances, totaling an additional £45 million. Following this transaction, the subsidiary managed to secure revenues of £271 million for the calendar year of 2023, with estimations pointing towards annual revenues growing to approximately £350 million over the next five years. Graham Sutherland, the chief executive of FirstGroup, emphasized the acquisition's importance, stating it will diversify the company's portfolio and significantly enhance medium-term earnings. The significant nature of this deal underscores the group's strategy to establish a stronger presence in the London transportation market during a period of potential transformation in the UK's public transport landscape.