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FirstGroup announces £125m sale of its Greyhound bus service in the US

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<span>Photograph: Linda Nylind/The Guardian</span>
Photograph: Linda Nylind/The Guardian

FirstGroup has announced the sale of its Greyhound bus service in the US to become fully focused on UK transport, as its Lumo train service operated its inaugural journey from London to Scotland.

The long-established North American intercity coach business will be sold to the German operator FlixMobility for $172m (£125m), in a deal that will see FirstGroup temporarily retain the depots and terminals, as well as pension liabilities – in effect offloading Greyhound for a net loss of $19m.

FirstGroup said the losses would be offset by the profits from its recent sales of its First Transit and First Student bus businesses in the US, after it decided to pull out of the North American market.

The chairman and acting chief executive, David Martin, did not rule out further international expansion, particularly in Europe, but said First was now turning around as a UK-focused group.

He said the deal with Flix “realises an appropriate value for Greyhound’s operations and ensures Greyhound’s legacy liabilities are suitably managed”, and “completes the portfolio rationalisation strategy which has refocused FirstGroup on its leading UK public transport businesses”.

FirstGroup is now the second largest UK bus operator outside London, and runs four of the UK’s rail networks – GWR, Avanti, South Western and TransPennine – as well as Hull Trains and now Lumo, an open-access service on the East Coast mainline.

Lumo will run a one-class service with limited stops between London and Edinburgh. It unveiled its new Hitachi trains on an inaugural run on Thursday, with passenger services starting on Monday, promising cheaper fares in seats with more legroom, wifi and tables. Most tickets will be sold in advance, entirely digitally – with walk-up tickets priced at the same level as the government-contracted LNER trains, currently £170 one-way between the two capitals.

Speaking at King’s Cross station in London, Helen Wylde, the managing director of Lumo, said it marked the “end of first class … so not just a handful of people travel in comfort”. She said early advance ticket sales had been “above expectations”, especially for weekends.

Lumo will eventually run five London-Edinburgh trains a day in each direction, under a 10-year open-access licence, promising to take market share from airlines rather than the state-run rival LNER.

FirstGroup’s head of rail, Steve Montgomery, said: “We have invested over £100m to ensure Lumo stands apart and encourages people to choose rail travel over air for journeys between the two capitals. This is an important moment for the industry as we encourage more people back on to the rail network.”

The cost of rail travel has otherwise risen significantly for many travellers, with the mandated 2.6% above inflation increase in March, and fewer cheaper advance fares now often available to consumers on government-contracted train networks.

Montgomery said for its operators such as GWR and Avanti, advance ticket availability had been affected by fluctuating capacity and a number of timetable changes during the pandemic, limiting train operators’ ability to sell services in advance.

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