Profit warning and apology to customers from group behind Southern Railway

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The group behind Southern Railway has warned over profits and apologised to passengers after "lengthy and significant" strike action left half-year earnings at its rail arm tumbling by 35%.

Go-Ahead, which runs the Southern service through its Govia Thameslink Railway (GTR) business, said full-year profits would be lower than expected at its rail and bus divisions after a tough first half, which saw underlying operating profits for its rail arm plunge to £26.9 million.

The group has been blighted by industrial action at Southern after proposing plans relating to staffing on its trains.

It said: "We apologise to our passengers who have faced months of severe disruption and inconvenience.

"Our primary aim is to improve the service for passengers and we remain in discussions with trade unions with the aim of reaching a full resolution of these ongoing issues so that we can deliver services our customers can rely on."

Go-Ahead chief executive David Brown acknowledged the toll the Southern strike disruption has taken on passengers, some of whom have reportedly lost their jobs after being left unable to get into work.

He said: "Our customers have suffered months of disrupted travel, impacting work and family lives and we are sorry that such inconvenience and hardship has been caused."

Southern has been involved in a bitter dispute with unions over proposals for so-called driver-only operated trains.

The main train drivers' union Aslef had suspended strike action, but is now holding fresh talks with Southern after members of the union rejected a previously agreed deal.

The deal had also sparked criticism from the Rail, Maritime and Transport (RMT) union, which called it a "shocking betrayal".

Go-Ahead's group-wide underlying earnings fell 13.2% to £74.1 million for the six months to December 31, while bottom line profits were 11.7% lower to £67 million.

It said, while the half-year results were as expected, full-year figures would be impacted by the ongoing strike action for Southern, while it added it was also seeing falling demand for bus travel, particularly in the north east and Oxford.

Shares plunged more than 14% after the profit alert.

The slump in rail earnings came after its GTR business was left nursing losses in the half-year following the Southern disputes.

The rail division also includes the Govia business, which is run as a partnership with French group Keolis and is the largest rail operation in the UK, operating the Southeastern and London Midland franchises.

Go-Ahead said GTR passenger journeys fell 3.4% and passenger revenue was 6.4% lower in the half-year.

The group said the uncertainty of the strike talks and negotiations with the Department for Transport over the franchise contract meant the impact on full-year profits could be plus or minus £15 million.

Its bus business delivered a 7.3% increase in half-year earnings to £47.2 million, but the group said passenger numbers fell 0.7% amid "challenging" trading in the North East and major city centre shop developments in Oxford.

Go-Ahead said the Brexit vote had also caused economic uncertainty, but said it was "not yet able to identify clear trends" linking this to the slowdown in passenger demand in some of its businesses.