Stagecoach blames earnings alert on Paris terror attacks impact

Passengers are avoiding travelling to major cities in the wake of last month's terrorist attacks in Paris, according to transport giant Stagecoach.

The firm - whose megabus.com inter-city coach business operates between Britain and Europe - cut its full-year earnings forecast as it said rail and coach sales had been hit across the UK and continental Europe since the attacks on November 13, which killed 130 people.

Stagecoach said: "We believe that revenue has been adversely affected by the terrorist attacks in Paris discouraging people from travelling to major cities."

Shares in the Perth-based business tumbled by as much as 14% after the earnings warning, despite Stagecoach assuring that it expects the impact on its business to be shortlived.

"We currently anticipate a recovery in (rail and inter-city coach) revenue growth rates," the group said.

Stagecoach said as well as reduced demand for coach journeys between the UK and Europe, discretionary travel in the UK had also been hit, with wary passengers travelling less on its South West train network outside commuter times and between London and Oxford on its coach services.

Its cautious outlook also came as it said it was seeing weaker-than-expected revenue at its UK regional bus arm.

The earnings alert was made as Stagecoach reported a 12% rise in underlying pre-tax profits to £121.5 million for the six months to October 31.

On a reported basis, pre-tax profits fell 7.6% to £90.8 million.

Martin Griffiths, chief executive of Stagecoach, said while "challenges remain in our sector in the short-term" the group is in "good financial shape".

But analysts at Liberum said aside from the Paris attacks impact on trading, they are also concerned over a "worsening" performance at Stagecoach's regional UK bus business, as well as the outlook for its megabus division in America.