ABERDEEN, Scotland – The CEO of FirstGroup, the corporate parent of Greyhound Lines, First Student and First Transit, resigned after the company suffered a fiscal-year loss of $437 million.
The company also said it was exploring options for financially slumping Greyhound, including the possible sale of the U.S. bus company.
Tim O’Toole, who was appointed chief executive of the Aberdeen-based rail and coach operator in 2010, said, “The time is right for me to step aside. Today’s results clear the way for the new approach sought by our chairman and the board.”
FirstGroup’s share price fell 11 percent in response to the company’s financial prospects. The $437 million loss follows a profit of $204 million in the previous fiscal year that ended March 31, 2017.
FirstGroup’s share price declined 66 percent under O’Toole’s leadership.
Wolfhart Hauser, the company’s executive chair, will run FirstGroup during the search for a new CEO.
“This year’s results fell short of our ambitions – we are disappointed that we did not make the further progress we intended based on the trends we saw at the end of the previous financial year,” Hauser said.
Hauser, 68, said that after eight years it was not such a surprise that O’Toole had left so abruptly.
“I think if you look at his age (62) it is not totally all of a sudden,” he said. “The board thought at this time it is very important to have a fresh view in relation to strategy.”
Matthew Gregory, FirstGroup’s finance chief, said external consultants had been appointed to review all options for the Greyhound business, including a sale.
“We are not giving up the fight for this business,” he said. “There is a root-and-branch review and all options are on the table. Our obligation is to maximize value for shareholders.”
Profits at Greyhound declineded 39 percent to $34 million as the bus group’s long-haul business took a battering amid increased competition from low-cost airlines in the U.S.
FirstGroup made a $371 million non-cash write-down on Greyhound to take into account the change in value of the business resulting from the shift in how people are choosing to travel.
The company rejected a takeover approach from U.S. private-equity group Apollo in April. In May, shareholder West Face Capital urged FirstGroup to sell the $1.9 billion company, break it apart or spin off its North American operations.
A British newspaper said O’Toole, who was paid $1.7 million in the previous financial year, has a contract that stipulates a 12-month notice period, so he will be negotiating a portion of his annual pay and pension because of his sudden departure.
