By Archie Mitchell
President Donald Trump’s comments on immigration contributed to a £124 million ($156 million ) hit for the budget intercity coach operator Greyhound, an executive at its parent company FirstGroup says.
President Trump’s comments on immigration, including about building a wall between Mexico and the U.S., caused a drop in immigrants crossing the border, which is a significant source of income for the company, FirstGroup’s finance director told MarketWatch.
Greyhound is the only national intercity coach operator in the U.S. and immigration is an important profit driver for it as new arrivals often use Greyhound coaches to travel to their final destinations.
“At the back end of 2019 into the start of 2020, the immigration flows coming out of Mexico into the U.S. were incredibly strong,” said Ryan Mangold. FirstGroup’s financial year ends in March.
“Donald Trump’s rhetoric then on anti-immigration and the wall that he wants to build across the across the border of Mexico had meant that a huge number of those immigration flows…coming out of the south and going into the U.S. almost evaporated over a very short period of time based on U.S. policy,” he said.
FirstGroup said it had reduced Greyhound’s value by £124.4 million in November at its half year results.
“This principally reflects the decline in immigration related flows on the Southern U.S. border states in the second quarter,” it said, also citing increased competition on some routes.
Releasing its full-year results on Wednesday it restated the reduction in Greyhound’s value and said it devalued the division by a further £62.5 million in the second half owing to poor performance and a change in its internal valuation process.
Once immigrants arrive in the U.S. they don’t just stop in Texas, Mangold said, taking long distance journeys to cities such as Seattle and Chicago.
“And they use Greyhound, I think, in preference to airlines, because it’s much cheaper to do,” he said.
More than 1 million foreign nationals obtained legal permanent resident status in the U.S. in 2019, according to the Department for Homeland Security, of whom 459,000 entered as new arrivals.
Compared with a year earlier, the DHS said, immigration by new arrivals decreased by 13%.
FirstGroup has previously announced it was looking to sell Greyhound.
FirstGroup’s /zigman2/quotes/202157466/delayed UK:FGP -1.54% share price fell 23% on Wednesday after it announced a £300 million loss for the year to March, including the write-down on Greyhound.