The transport company secured 70% of last year’s revenue in October compared to around 60% in August, while last month delivered the highest underlying earnings (EBITDA) in the year to date.
As a result, the FTSE 250 firm expects to deliver £170-190mln EBITDA for the year to December 31, which is expected to close with £1.5bn in cash and undrawn committed facilities.
In the recent weeks, National Express was awarded a 200 urban bus contract in Porto, Portugal, as well as a major employee shuttle contract and an accessible transport contracts in the UK.
The ALSA bus division does not have any revenue risk in over 40% of contracts, which is expected to extend to 50% by the end of 2021 as recent new contracts are mobilised.
However, Spanish long haul and regional coach passenger numbers are currently running at 15-20% of last year, while in Morocco there has been a “rapid” bounce back in passenger numbers in four out of six contracts.
In North America the company is currently operating services on 75% of its school bus routes and has secured around 80% of pre-pandemic school bus revenue.
In the UK, government support is fully underwriting the cost of operating bus service.
“The improvement in trading has been slower than expected because of further waves of COVID-19,” analysts at Peel Hunt noted.
“Despite the disappointing trading and downgrades, National Express remains undervalued assuming that travel restrictions are relaxed during 2021 and demand recovers further.”