3rd Quarter Results

Embargoed until 7:00am on Thursday 14 January 2010

                                FIRSTGROUP PLC                                 

                         INTERIM MANAGEMENT STATEMENT                          

FirstGroup plc ("The Group") provides the following update on trading during
the third quarter ("the period") from 1 October 2009 to 31 December 2009.

Summary

  * Overall trading in line with management expectations
   
  * The Group remains on course to achieve earnings and cash targets for the
    year
   
  * £100m per annum cash generation in 2009/10 to be used to reduce net debt
   
  * £200m per annum cost reduction programme across the Group is mitigating
    impact of increased fuel costs this year and effects of recession on
    trading
   
  * Group well positioned to continue to trade robustly through economic cycle
   
Overall trading

The Group provided an update on trading as part of its half-yearly financial
results announcement on 4 November 2009. Since then overall performance remains
in line with management expectations with the Group on course to achieve its
earnings and cash targets for the year.

The continued good performance is underpinned by a diverse portfolio of
operations which is well balanced between contract-backed and passenger
revenues providing greater stability particularly against a challenging trading
environment. In our businesses which depend on passenger volumes we have acted
quickly to mitigate changes in demand and maximised the flexibility that exists
within the operating models. These actions, together with our cost reduction
programme to achieve £200m of annual savings, have mitigated the increase in
hedged fuel costs this year and the impact of the recession on trading. The
Group remains on course to generate at least £100m of cash for this financial
year and for 2010/11, which will be used to reduce net debt.

UK Bus

Like-for-like passenger revenue grew by 0.7% during the period. Despite the
challenging trading environment we are encouraged by improving revenue trends
and as previously reported expect like-for-like passenger revenue growth of
between 1 - 2% for the full year. The action we've taken to match supply to
demand, by reducing mileage and tailoring our service provision to changing
travel patterns, has enabled us to reduce our cost base and ensure that we
continue to protect revenue per mile. We expect that there will be a positive
impact on our UK Bus margins during the second half of this year as the
benefits of the cost reduction programme are fully realised.

UK Rail

Like-for-like passenger revenue growth was 1.7% during the period. We are
encouraged by the performance of our Rail division which continued to deliver
growth despite the clear effects of the recession on the UK's rail industry.
The contractual arrangements within our franchises, which are providing 80%
revenue support at First Capital Connect and First Great Western, continue to
ensure substantial insulation from reduced passenger demand. From 2 January
2010 regulated fares, the majority of UK rail journeys including season tickets
and many day singles and returns and long distance off peak fares, were reduced
by 0.4% as part of the Government's policy to link the price of regulated rail
tickets to RPI. However, as previously stated, we expect that like-for-like
passenger revenues in the second half of this year will remain broadly in line
with the prior year.

North America Contract Businesses

During the period US Dollar revenue for our North American contract businesses
increased by 0.7% at constant US:Canadian Dollar exchange rates. First Transit
continues to perform well and were recently awarded new contracts to provide
transit management services in California and Oregon.

In First Student while the core provision of contracted services remains
resilient we have, as previously reported, seen a reduction in growth of
discretionary and new services that would usually be added to an existing
contract in a normal year. Our experience of this market, based on past periods
of economic downturn, is that this growth should recover as the economy
strengthens however we do not expect to see this growth return during 2010.

Notwithstanding the current economic backdrop, the North American school bus
market provides a significant opportunity for future growth. The scale and
synergy benefits of our market leading position, together with the further
actions we have taken to reduce our cost base, will provide a significantly
enhanced platform for future growth.

The good progress of our cost reduction plan is partially offsetting the lower
discretionary revenues within existing student contracts and the increased cost
pressures we are absorbing this year including the additional hedged fuel
costs. Despite the challenging trading environment, we expect that full year US
Dollar margins for our North American contract businesses will be maintained in
line with the prior year.

Greyhound

Revenues at Greyhound which, as previously reported, have been affected by the
weak economy and increased unemployment in North America, continue to track our
expectations. During the period we saw the continuation of improving trends we
reported at our half-year results with like-for-like US Dollar revenue reduced
by 11.4%. As a result of this trend, coupled with the positive impact of our
actions to reduce operating costs and rapidly match supply to demand, we
believe that the full year margin performance of Greyhound should exceed our
expectations. The measures we have taken have transformed Greyhound's operating
model and placed the business on a firmer footing to benefit from the future
economic upturn.

Outlook

Looking ahead the Group remains on course to achieve its earnings and cash
targets for the year. The inherent strength and resilience of our business
portfolio, together with the actions we have taken to maximise the flexible
operating models and to reduce our cost base, will ensure that the Group
remains well placed to continue to trade robustly through the economic cycle.
While trading conditions remain challenging the Board is confident in the
underlying strength of the Group and its ability to continue to deliver
long-term shareholder value.

A conference call for analysts and investors will be held at 9am today. Please
call [phone] / 0512 in advance of the call to register and receive
dial-in details.

Contacts FirstGroup plc:

Sir Moir Lockhead, Chief Executive

Jeff Carr, Finance Director

Tel: [phone]

Rachael Borthwick, Corporate Communications Director

Tel: [phone]