A Roller Coaster Ride on the Buses

By MANFREDA CAVAZZA

BRIAN Souter’s business is trains and buses, but he is pretty fast on his feet as well. Dressed in a linen suit and eyecatching red shoes, Souter, 52, has just come back from a family holiday in Cuba and excitedly recounts how he chased a pickpocket who had stolen his wife’s bag.

‘He was half my age. I was never very athletic when I was young. But when I really have to move, I do. So I started chasing and I kept up with him.

Then I started shouting Thief!

Thief! and I am running for all I’m worth.

‘Everyone else in the street started shouting and I’m still on his tail.

The guy then just turned around, looked at me, dropped the bag and ran off!’

He pauses for breath and then says: ‘The funny thing about it is my daughter said to me, “You know dad, you can look pretty crazy when you’re angry”.’ He laughs and points to his head: ‘I’m going bald and I wear a bandana when I’m on holiday, so I probably do look a bit scary.’ Not many people would disagree with that, but he has an infectious enthusiasm for the bus company he grew into a successful business with a market cap of Pounds 1.2bn.

Souter’s focus now is on expanding the less regulated bus operations outside London while continuing to grow the US division.

He also wants to win a few more rail franchises in the UK. South West Trains was hit by strikes this week but the lucrative franchise is up for grabs again and Souter is confident the Stagecoach bid is a strong one.

Analysts are positive about the company too, after it reported strong profit growth to Pounds 140m and an 8.2pc rise in group turnover to Pounds 1.5bn last year.

Stagecoach also returned Pounds 250m to shareholders and is expected to return at least that again this year.

He is also excited about the little things especially the no- frills bus service Megabus, which is set to make Pounds 30m in revenues this year.

He says there is a feeling of ‘great movement’ within the organisation, which has shed its image of ten years ago when it was a company simply ‘managing decline’.

Souter’s combative attitude was nurtured on the council estate in Perth where he grew up, before going on with his sister Ann to amass a fortune of nearly Pounds 400m.

He now controls one of Britain’s biggest rail and bus empires, with operations in the UK and America.

THE journey has been an eventful one. Along the way he nearly brought Stagecoach to its knees with a disastrous acquisition in the US, which led to a collapse in the company’s share price to an alltime low of 9p in 2002.

Before that, Souter, a committed Christian, whipped up a storm over government plans to abolish the controversial Section 28, which outlawed the promotion of homosexuality in schools.

He used his own millions to launch a campaign against the plans, eventually forcing ministers into a series of U-turns which led to the recognition of marriage being an obligatory part of sex education guidelines for schools.

But, as he says: ‘We are well through all that now.’ Souter is the first to admit that sometimes, ‘having a go’ can lead to fingers being severely burnt.

Stagecoach bought Coach USA, the largest bus and coach operator in the US, in 1999. It was Souter’s biggest deal and, as he says himself: ‘It was a deal too far for us.’ He gave up his role as chairman to become chief executive and got down to sorting out the problems.

‘It wasn’t consolidated properly and was too dependent on the leisure market. But we subsequently reshaped that company and it has become very profitable.

It was a hiccup, but we sorted it.’ The North American business made profits of Pounds 65m last year, up from Pounds 53m the year before.

Souter and his sister older by 11 years founded Stagecoach in Perth in 1980 with just two buses.

At the time he was training to become an accountant at Arthur Andersen, while his sister was a nurse. But Souter had always ‘loved the buses’. His father was a bus driver and he used to work part- time as a conductor, which he describes as ‘his dream job’.

When Margaret Thatcher started opening up the transport market in 1980, Souter spotted an opportunity. He bought two buses and started operating coach services in Scotland, as well as longer distance links to London.

He recalls the first eight years as being ‘horrible’. ‘I had actually broken off an engagement the year before, which is lucky because I wouldn’t have been able to be married and start up the company.

‘We were working 18 hours a day.

We had to operate the phones through the night.’ But the hard work was clearly worth it. By 1988, Souter was starting to make some money and he decided to ‘bet the whole farm’ on privatisation.

He bought a number of National Bus Company businesses from the government, including Hampshire, Cumberland and East Midlands.

Expansion continued in the 1990s, with acquisitions of bus operations in Scotland, Newcastle and London.

It was at this time that Stagecoach started expanding overseas by snapping up bus companies in Africa and New Zealand.

Experts began to worry that Souter’s empire was becoming overstretched, but that did not stop him from acquiring major bus companies in Portugal, Sweden and later Hong Kong.

The company was floated on the London Stock Exchange in 1993 with a market value of Pounds 134m, just as Stagecoach was beginning to diversify into the rail sector.

After the UK network was privatised in 1995, Stagecoach became one of the first companies to win one of the new franchises when it took over South West Trains.

Some would argue the ambitious foray into the US was proof that Souter had finally let success go to his head.

But the experience has clearly helped the entrepreneur act more like the boss of a plc and start thinking about his shareholders.

The decade that followed saw Stagecoach retract from nearly all its international markets.

‘In some of the markets we were in there were issues about regulation,’ explains Souter. ‘We took a step back and decided we could do much better, for the shareholders, in deregulated markets. We like the higher returns.’

Stagecoach sold its regulated London bus business to Australia’s Macquarie Bank in June for Pounds 260m.

Despite his achievements and the wealth he has accumulated, Souter shows no sign of slowing down.

‘We may have been in the game for 35 years but we’re not out of ideas. We haven’t run out of steam.’

FACT FILE

AGE: 52 FROM: Perth

FAMILY: Married, with four children

EDUCATION: Chartered accountant at Arthur Andersen

FAVOURITE MODE OF TRANSPORT: His own converted double-decker bus, which he takes on holiday.

(c) 2006 Daily Mail; London (UK). Provided by ProQuest Information and Learning. All rights Reserved.