The owner of National Express has formally kicked off the sale of its American school bus business in an attempt to reduce its debt pile as it continues the long recovery from the pandemic.

Mobico Group, which told shareholders last October that it had appointed advisers to offload the unit, said that the sale was “progressing in line with expectations”.

Ignacio Garat, chief executive, said that addressing the group’s leverage “remains a priority and in addition to commencing the formal sale process for North American School Bus, we have identified new organic debt reduction initiatives that will deliver in the second half”.

Analysts at Bank of America have estimated that the unit, known for its yellow buses, has an enterprise value of £400 million, while Jefferies expects the disposal “to prove a material positive catalyst”.

Analysts at Peel Hunt, however, said that they remained concerned that the value realised from disposal of the business, after fees and provisions, “would allow the group to deliver sufficiently”.

News of the sale, together with what City analysts dubbed a “robust interim performance”, lifted Mobico’s shares 10¼p, or 17.7 per cent, to close at a five-month high of 68¼p.

The reaction suggests that there is light at the end of the tunnel for the FTSE 250 company, whose performance has been marred by a pandemic-induced transport shutdown followed by industrial action, soaring costs, staff shortages, reporting delays and profit warnings that have caused its shares to crash more than 80 per cent over the past five years.

Mobico posted a pre-tax loss of £1.5 million in the six months to the end of June, a marked improvement on the £41.9 million loss it recorded in the same period the year before. This was helped by a 5.4 per cent increase in revenues to £1.65 billion, from £1.57 billion.

The company began in 1972, when the state-owned National Bus Company consolidated its various services under the National brand, which became National Express two years later. It listed on the London Stock Exchange in 1992.

Until last summer, Mobico was known as National Express, the brand it is best known for in Britain. As well as its school bus business in the United States, it also owns Alsa, a Spanish train and bus operator, and a German rail division.

Alsa delivered a record half-year performance as operating profits jumped 57.1 per cent to £79.8 million, which Mobico said “underpinned the overall growth of the group”.

In America, revenues rose 3.8 per cent to £609.3 million, while in the UK, sales improved by 7.7 per cent to £307.3 million due to an 8 per cent increase in passengers and a jump in bus fares. Bus ticket prices in some parts of the UK climbed 12.5 per cent in July 2023, and rose again at the end of June this year.

However, in Germany, where Mobico is the second-largest rail operator in North Rhine-Westphalia, revenues fell 12.5 per cent to £120.2 million in the period. The company blamed the decline on “energy market volatility, industry-wide labour disruption to the train driver market and persistent levels of inflation in Germany.”