Stagecoach is to place a £71 million order for 584 new buses in what is the Perth-based transport operator’s biggest bus order to date.

Inner-city and shire areas will both benefit from the proposed investment in services, which is being made amid increased profits in the British bus business.

Stagecoach’s passenger volumes have increased by 3.9 per cent year-on-year and operating bus profits increased 54 per cent to £52.5 million in the first six months of the year.

Brian Souter, the founder and chief executive of the business, believes that the humble bus will be at the centre of a green revolution in public transport as users make a concerted effort to reduce their carbon footprint. “We believe increasing car congestion, inward migration and a growing focus on environmental issues will provide more opportunities to attract passengers to our public transport services in the years ahead,” Mr Souter said.

“We have made bus travel acceptable to middle-class travellers in the South East of England and we are starting to see that attitude spreading up North.”

Stagecoach has been using telemarketing techniques to persuade householders living on bus routes to abandon their cars for public transport. Stagecoach has called more than 600,000 people in the past two years and reports a 12-to15 per cent success rate. It has also started to advertise its services on television.

Details of the investment in buses emerged as Stagecoach reported fore-cast-beating interim results for the six months to October 31. Revenue at the business rose 8.1 per cent to £820.8 million. It reported pretax profits of £84.6 million, compared with £77.4 million the previous year.

The strong results allowed the company to raise its dividend 12.5 per cent to 1.35p per share. On that basis Mr Souter will receive a payout of £2.6 million, based on his 13 per cent stake in the group.

The bus and rail group said that its expectations for the full year remained in line with an announcement made in November, in which it said that its profit expectations had increased.

Despite rising fuel prices, Stagecoach is confident that demand for bus and rail services will continue to grow and that the company can increase revenue organically faster than the industry average.

The transport company said that it had made a strong start to its new ten-year South West Trains rail franchise, which includes the running of about 1,600 trains a day in the South East out of London Waterloo.

Like-for-like revenues rose 15.2 per cent after the company hired 100 ticket officers to catch fare evaders, and installed nearly 200 extra ticket vending machines.

However, the company said that profits from South West Trains could be volatile over the life of the franchise, as the subsidy from the Department for Transport will reduce by £100 million over the next two financial years.

The margin on the rail franchise fell from 11.3 per cent last year to 7.8 per cent this year, as Stagecoach’s operating profits on the commuter services into Waterloo fell from £31.4 million to £25.3 million.

Stagecoach’s share of profits at Virgin Rail Group (VRG), in which it has a 49 per cent holding, improved to £12.9 million, from £9.2 million a year earlier.

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