During 2001 we saw a number of significant developments in our USA division, with the consolidation of businesses and functions as well as the sharing of best practice across operations. The division benefited as a slower US economy helped improve the quality and availability of driver applicants. Our operations remain contractually based and in 2001 we continued to enjoy a high level of success in renewing our existing contracts while we strategically bid or negotiated an exit from those contracts which did not meet our financial returns or had little or no strategic relevance to the overall business.

We were impacted by the increase in insurance costs after the annual renewal of our policies in October 2001.

Student transportation

The division had a strong start to the 2002 school year largely due to the improved availability of drivers. We continue to invest in the quality of our staff, formalising and expanding our training programmes for all general managers, operation supervisors and dispatchers. We anticipate that these programmes will be completed by April 2002.

In August 2001, we rebranded the division “Durham School Services”. The Durham brand is well established and brand equity research showed that we would benefit from a consistent umbrella brand. The rebranding was combined with standard policies and procedures in financial reporting, safety, maintenance,recruitment and retention of personnel being extended throughout the division.

Durham School Services continues to focus on expanding the market. Moving forward, in view of the changing economic climate in the USA, school districts are likely to outsource more of their services, including their school bus operations. Currently 30% of the student transportation market is outsourced. With only 2% market share of the total school bus transportation market and 7% of the privatised market, we are well positioned to benefit from this development. We also continue to review potential share shift opportunities.

Public transit

ATC’s focus is on the combination of the provision of quality services and the delivery of improved financial results. During the year we strengthened our contract bidding team which has resulted in improved consistency in bidding and the re-negotiation of lower margin contracts. As a result, significant wins were achieved in California and Washington.

Currently 10% of the public transit market is outsourced and ATC holds a 2.5% market share leaving it well placed to benefit from any increase in outsourcing.

Consolidation and centralisation of operations, most notably within the finance function, ensured improved financial control and increased standardisation of the ATC product offering.

Training and the continuous maintenance of skills are the two most important elements of transportation delivery. ATC requires its managers and supervisors to attend training programmes to ensure that there are comprehensive curricula for all levels of staff including vehicle operators, operator trainers, road supervisors and customer service agents as well as all levels of other staff. In addition ATC requires its managers and supervisors to attend its Management University once a year. This week-long training course, held at ATC’s corporate headquarters, is designed to create a consistent leadership message among all ATC divisions. During the year ATC also established a separate Maintenance University to improve the skills of its maintenance managers and supervisors, bringing them up to speed on the latest technological advances.

ATC commands a strong place in the industry as a provider of quality services with reliability on average exceeding 90%. It has one of the lowest accident and complaint rates in the industry.

Airport management

The tragic events of 11 September severely impacted the operations of Stewart International Airport, located 55 miles north-west of New York, and passenger numbers declined by 20%. Performance was also affected by the ComAir strike and the bankruptcy of Midway Airlines.

Despite this, significant progress was made during the year, including the completion and opening of a federal government facility cargo inspection station, continued development of the industrial park, as well as certain facility improvements which were primarily funded in partnership with governmental aviation programmes. Permission was also granted for the construction of the new control tower.

Research has established that the Durham School Services brand has high name recognition. The brand was rolled out across all our student transportation operations last summer.