National Express owner faces leadership crisis after reporting massive losses and halting dividend

The chief executive of Mobico Group, the parent company of National Express, has stepped down amidst a financial crisis that has seen the company report staggering losses of £793 million. Ignacio Garat, who had been at the helm since 2020, left the company by mutual agreement. The announcement came shortly after Mobico revealed its withdrawal from the US school bus market, a move that incurred a significant financial hit.

Phil White, a veteran of the company and former chief executive, has been appointed as executive chairman. White, aged 75, had initially been hired as a part-time chairman earlier in the year. However, his role has expanded, and he is now tasked with steering the group through its challenges while searching for a new chief executive. Despite the group’s troubles, White remains optimistic, citing robust operations in the Iberian Peninsula. He explained that his focus will be on strengthening successful divisions while resolving problems in weaker areas.

Much of the group’s troubles stem from difficulties within its UK coach business, West Midlands buses and, notably, its lossmaking German railway operations. Mobico’s decision to exit the American school bus market, a sector it entered ambitiously under White’s leadership nearly two decades ago, has resulted in a £547 million writedown. This, combined with other write-offs, has left Mobico with nearly £1 billion in debt. The lacklustre financial results have also forced the company to suspend dividend payouts, further dismaying investors.

The share price has plummeted to a record low of 32p, halving in value in just a week. This has left the company with a market capitalisation of £204 million. Investors had initially anticipated a more positive outcome from the sale of the US business, which is expected to generate £280 million. However, the disappointing revenue from the exit has overshadowed this figure, marking a bitter moment for shareholders.

Underlining the company’s need to reshape its leadership, White commented that the next chief executive does not necessarily need a background in passenger transport. Innovative thinking, he suggested, may be more valuable than industry experience. With a strong emphasis on reversing the fortunes of the UK operations and stabilising its European ventures, the company faces an uphill battle in restoring faith among stakeholders.

Despite its challenges, Mobico’s European division, Alsa, remains a rare bright spot. The Spanish transport segment has contributed significantly to the group’s operating profits, which reported a 14 per cent rise to £187 million on turnover of £3.4 billion. Still, the overall financial picture reflects the ongoing struggles within the broader portfolio of businesses.