Parent company of Citybus and New World First Bus mulls merging option

A merger of New World First Bus and Citybus may take place in the future to help the business of both companies to stay afloat amidst the pandemic, and in the fierce competition from MTR. 

According to several media reports, Adam Leishman, CEO of Bravo Transport Services, who took over the two bus companies last October, said the company was considering different possibilities to keep business sustainable, including a merger of the two firms. He said that business has been in very challenging from a financial position but the company is committed to the long-term future in Hong Kong. 

Leishman admitted that the merger was just an option at the moment, as the company had no firm plans yet since the government was conducting a consultation on the renewal of two bus franchises expiring in 2023. Business of both companies are impacted by the pandemic. In a statement, Bravo Transport Services' 2020 pre-tax losses were high at HK$813m, prior to HK$551m of government support, which reduced the loss to HK$262m. 

However, government subsidies came to an end in December 2020. The end of this Government support, combined with the impacts of the fourth wave and extended social-distancing measures, resulted in increased losses of HK$221m in the three months from December 2020 to February 2021, 84% of the full 2020-year losses. Meanwhile in 2020, the ridership of both companies decreased significantly by 27% against 2019, equivalent to 107 million less people on buses. Routes serving Hong Kong International Airport and the border with China saw reductions of over 90%. As of April 2021, the total ridership was still down 25% from the equivalent month in 2019.

The recent opening of the Tuen Ma Line of MTR also resulted in the decrease in ridership, according to Leishman. He said both bus companies had lost about 10,000 riders every day since the opening of the Line on 27 June. 

Both bus companies applied for fare increase. In March, the Hong Kong government allowed both firms to raise fares by almost 12% in two phases with 8.5% from April 4 and a further 3.2% from 2 January 2022. KMB, their competitors in Hong Kong, also adjusted the fares with an average 5.8% and 8.5% increase for its about 350 solely-operated routes and 51 jointly-operated routes respectively, with effect from 4 April 2021. The rate of the KMB Monthly Pass will remain unchanged at $780. 

In a previous admango report, OOH ads only accounted for 11% of Hong Kong's entire adspend in 2020. The fall in ridership and merger of bus companies may result in a decrease in OOH adspend. 

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