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National Express heads for the buffers

You might have thought that the Spanish had learned from observation that British transport businesses are much riskier than they look. Ferrovial’s purchase of airports operator BAA has turned into a financial plane crash, but perhaps it’s the hope of clawing back some of its paper losses on National Express that has encouraged their fellow Spaniards in the Cosmen family to consider buying the whole business.

National Express is barely sustainable in its current form. It has infuriated the British government by walking away from a big rail franchise when it couldn’t sustain the price it had recently agreed to pay. As a result, it faces the prospect of having to fight to hold onto the other two, in the knowledge that these are the last it will ever get.

On Thursday it scrapped the dividend and the directors added that there was “significant doubt” about the company’s ability to continue as a going concern. They are having to struggle on without the wisdom of Richard Bowker, who as chief executive drove them into this rusty siding, and a share price that went from 10 pounds to 3 pounds during his three years at the controls.

There’s a curiously binary outlook now. An inciteful analysis from Pali International can’t see any value for a bidder paying more than the current 344 pence, since that implies an unattractive internal rate of return of around 17 percent. Even that assumes a new owner can persuade the government to view the company as a bona-fide owner of rail franchises again. Brian Souter at rival Stagecoach is keen to buy bits of the business, but he’s not known for over-paying, and there have been no talks. As Pali concludes; “We would not regard 300p as a floor if [the bidding consortium] walks.”

from Neil Collins:

East Coast rail franchise crashes: Bowker unhurt

Richard Bowker is a man who appears entirely untroubled by self-doubt. Even as he was scrambling clear of the financial train-wreck that is today's National Express, he smoothly explained that he's been in talks for weeks lining up his next destination, running trains for the United Arab Emirates.

His CV looks like a parody of the dynamic young executive, never in the same place for long enough for the results of his decisions to become apparent.  He was not even 30 when he became head of London Underground's Private Finance Initiative unit, and we can see since what a fiasco that's since become.

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