New owner of Hong Kong’s Citybus and New World First Bus weighs merger as losses mount
- CEO of Bravo Transport Services, which took over the two operators last year, admits hefty losses have forced the company to look at cost-trimming options
- But no firm plans can be made until after the government carries out a consultation on the renewal of the two franchises, which will expire in 2023
Speaking openly for the first time on Thursday, Adam Leishman, CEO of Bravo Transport Services, the new company that runs the two bus firms, said the firm was examining all possibilities to keep business sustainable, including a possible merger of the two firms, as the Post reported earlier.
“Honestly on the back of Covid-19, the business has been in a very challenging financial position,” he said. “We’re very committed to the long term in Hong Kong. We want to see growth. We want to see a sustainable healthy business and we look at all possibilities as to how we do that.”
But Leishman said the company had no firm plans yet about the proposed merger as the government was conducting a consultation on the renewal of two bus franchises, which would expire in 2023.
“[The merger] is not something that is going to happen in the immediate future. But it’s one of the options we are looking at,” he said.
Bravo took over the two bus companies after a consortium led by private equity fund Templewater Bravo paid HK$3.2 billion (US$412 million) to buy them from infrastructure company NWS Holdings last October.
Citybus and NWFB account for about 30 per cent of franchised bus operations, running a 1,700-strong fleet on more than 210 routes, with a total of 5,100 workers.
But hefty losses since the pandemic struck in January last year have forced the company to examine cost-trimming options including a merger, realigning a third of its routes on Hong Kong Island and further staff lay-offs.
Owner of Hong Kong’s Citybus, New World First Bus urges overhaul of fare system
In March, the government allowed both firms to raise fares by almost 12 per cent in two phases – 8.5 per cent from April 4 and a further 3.2 per cent from next January 2.
The group’s pre-tax loss reached HK$813 million last year as overall ridership fell 27 per cent compared with 2019. Ridership on its airport routes plunged by more than 90 per cent as international travel ground to a halt.
Government subsidies helped trim the losses to HK$262 million last year, but for the three months from December to February, losses have already soared to HK$221 million and given the pandemic situation, the outlook remains grim.
Commuters to pay as much as 12 per cent more for bus rides
In another blow to Bravo, Leishman said the recent opening of the new Tuen Ma rail line had caused the group to lose about 10,000 riders every day.
Despite the losses and challenges, he said the company did not have a plan yet to make another fare increase application or carry out more lay-offs, adding management was adjusting services to meet changing demand.
“We are doing everything we can to minimise fare increases and looking at non-fare revenue opportunities and other possibilities,” Leishman said. “We are going to get through the difficult times.”
