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;TG justifies profit loss

4th August 1988, Page 15
4th August 1988
Page 15
Page 15, 4th August 1988 — ;TG justifies profit loss
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Which of the following most accurately describes the problem?

I Increased competition on is routes and a busmen's rike have been identified as e reasons for the Scottish ransport Group's failure to ake a profit in 1987.

The state-owned company, hich operates buses and feres, lost £400,000 in 1987 bere exceptional items and cation. This compares with a 17 million profit in 1986. Group chairman and chief Kecutive Ian Irwin admits )87 was "a difficult year" and iat the deregulation of bus !rvices, which had been welmned by the group, had "unashed a number of forces rhich were more damaging to le group in the short term than anyone anticipated."

Existing competition for traffic in the major centres of population intensified dramatically, and many more competitors were attracted into the bus industry — particularly into the short haul market — an area in which the STG-owned Scottish Bus Group earns 90% of its income.

Widespread industrial action at the start of the peak holiday season had aggravated the situation with the result that competitors had moved in, therefore making SBG's routes less profitable.

SBG implemented staff and bus fleet cuts and reached a fresh productivity deal with its employees which, says the report, had brought the firm back to budgeted profitability by the end of the year.

The SBG is about to be sold off in 10 separate units despite strong recommendations by the group's board that it be sold as a single entity to employees.

Irwin says: "The decision has been made and the group will now be discussing with the Scottish Office the detailed pattern of the privatisation.

"I will also be pressing the Secretary of State to back up his stated desire for employee participation by endeavouring to provide general preferential arrangements for employee bids," he states.

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Organisations: Scottish Office

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