A £1 Billion Hit From Labour’s Renationalization Will Affect The Largest Train Operator In The UK

The largest rail operator in the UK is anticipated to suffer a substantial £1 billion decline in revenues if Labour’s proposal to return train networks to public ownership is implemented, according to analysis by City broker Peel Hunt.

Peel Hunt analysts have adjusted their projections for FirstGroup’s rail revenues in 2026, citing recent polls indicating a potential Labour victory in the upcoming general election. FirstGroup currently owns South Western Railways, Avanti West Coast, and Great Western Railway and manages nearly 4,500 buses across the UK.

Under the leadership of Sir Keir Starmer’s shadow transport minister, Labour is advocating for a “radical” overhaul of Britain’s railways, with potential plans to reverse the privatization initiated in the mid-1990s. However, industry companies are actively opposing these proposed changes.

Peel Hunt’s Alex Paterson expressed a cautious outlook on rail revenues due to Labour’s nationalization agenda, leading to a downward revision of FirstGroup’s expected rail revenues in 2026 from £2.79 billion to £1.66 billion. In contrast, Peel Hunt predicts FirstGroup’s rail division to achieve revenues of £3.7 billion next year.

Paterson anticipates a 15% decline in FirstGroup’s profits in 2026 to £115 million, encompassing both rail and bus operations, as a consequence of the projected revenue slump. If Labour proceeds to strip FirstGroup of its rail contracts, Paterson foresees a decline in ticket sales, management fees, and parking charges.

FirstGroup acknowledged the nationalization threat in its half-year report, stating its active engagement with the Labour Party to understand the evolving rail policy in detail. CEO Graham Sutherland highlighted ongoing efforts to diversify the business away from government-backed rail contracts, focusing on developing commercial “open-access” rail ventures like Lumo and Hull Trains, which operate independently of government involvement.

Despite the looming nationalization threat, FirstGroup’s shares have experienced a remarkable 70% surge over the past year, valuing the company at over £1 billion.

- Published By Team Timeswire

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