Acquisition

NATIONAL EXPRESS GROUP PLC
16 August 1999 

 
                   NATIONAL EXPRESS GROUP PLC
                                
 Agreement to acquire fourth largest USA student transportation
            bus operator, Durham Transportation Inc.
                                
National  Express Group PLC (the 'Group'), the leading  UK  mass
passenger  transport services company, announces today  that  it
has  acquired  the  North  American student  transportation  bus
operator, Durham Transportation Inc., ('Durham Transportation'),
for   £109.3m   ($178.5m)  in  cash,   payable   to   the
shareholders  on completion.  The consideration will  be  funded
from existing and new bank facilities.
 
Durham  Transportation is currently the fourth  largest  student
transportation  bus operator in the USA. This  acquisition  will
ensure  that the Group has a substantial presence in  a  sector 
which  is served by approximately 435,000 vehicles and estimated
to  be worth $13bn. National Express Group will now be the third
largest  operator,  with 5,600 vehicles serving  schools  in  14
states  and transporting approximately 630,000 pupils each  day,
around 115 million a year.
 
Durham  Transportation  reported profit  before  tax  of  £8.6m
($14.1m)  for  the year ended 31 December 1998, on  turnover  of
£63.9m  ($104.3m).  At 31 December 1998, the company  had  net
assets   of  £23.0m  ($37.5m),  and  total  debt  of  £7.6m
($12.5m).  Before amortisation of any goodwill, the  acquisition
is expected to be immediately earnings enhancing.
 
Based in Austin, Texas, Durham Transportation was established in
1952.   Since Larry Durham became Chief Executive in  1976,  the
company  has grown largely through the successful conversion  of
school  bus  service contracts from the public  to  the  private
sector.   With  32 customer service centres in five  states,  it
currently operates 99 contracts with a fleet of 3,514 vehicles -
primarily  in California and Texas but also in Idaho, Washington
and  Oregon.  Durham Transportation employs approximately  4,200
staff,  including  almost  3,500  drivers  and  chaperones,  and
transports around 430,000 pupils daily, approximately 80 million
each year.
 
The  Group  also  announces that it has extended its  divisional
management  structure with the formation of a new USA  Division,
and  the  appointment of Larry Durham (56) as  Divisional  Chief
Executive. Mr Durham will continue to be Chief Executive Officer
of Durham  Transportation  and will have additional  responsibility
for all of the Group's operations in the USA and for the further
development  of the business across North America.  He  will  be
supported   by   Dean   Eldrid,  Director  of   North   American
Development,  who  has  had responsibility  for  developing  the
Group's interests in the USA since March 1998.
 
Commenting  on the acquisition, Phil White, Chief  Executive  of
National Express Group said:
 
'I   am   delighted  to  announce  the  acquisition  of   Durham
Transportation which will give us critical mass  in  the  United
States'  school bus sector. I would also like to  welcome  Larry
Durham  - and the Durham Transportation management and employees
-   to  the  Group.  Larry's  appointment  as  Divisional  Chief
Executive  reflects  his  strong  leadership  skills   and   the
contribution which he has made to both raising quality standards
in  the  school bus services industry in the USA and the overall
development of the sector.
 
Our  enlarged  school  bus  operation  now  gives  us  extensive
geographic spread and operational coverage in the USA.  It  will
enable  us  to  exploit  fully  the considerable  potential  for
converting  more services from the public to the private  sector
and for further consolidation in a highly fragmented market.  It
is  estimated that only 30% of school bus services are privately
run  in the USA, with over half of these provided by some  5,000
local operators.
 
In  line with the Group's devolved management structure, each of
our  USA  operations will continue to retain their own  identity
and focus on delivering high-quality, cost effective services to
their  local  customers and communities. The enlarged  operation
will  also  be  able to implement more effective purchasing  and
procurement   strategies  which  will   give   it   considerable
competitive advantage.
 
The  new  USA division now gives the Group a sound platform  for
further  developing  its presence in the  wider  North  American
public transit market.'
 
Larry Durham, Divisional Chief Executive, (National Express
North American Division) added:
 
'The  acquisition  of Durham Transportation will  give  National
Express  Group  significant coverage  across  the  USA.  I  look
forward  to  developing  the Group's North  American  interests,
delivering consistently high quality, value for money and  above
all,  safe services to our customers. The enlarged operation  is
well  positioned  to convert more school bus services  from  the
public   to  the  private  sector,  take  advantage  of  further
consolidation opportunities within the school bus industry,  and
to develop its presence in the wider public transit market.'
 
For further information, please contact:
 
Phil White, Chief Executive                                  
National Express Group PLC        Tel: [phone]
 
Dean Eldrid
National Express Corporation      Tel: [phone]
 
Michael Mackinnon
Lehman Brothers                   Tel:[phone]
 
Helen McCorry, Group Communications Manager
National Express Group PLC        Tel: [phone]
 
Julian Hanson-Smith/Nicola Marsden
Financial Dynamics                Tel: [phone]
 
 
NOTES FOR EDITORS
 
1. National Express Group PLC
 
National Express Group PLC is a leading mass passenger transport
services company.  When it announced its preliminary results for
the year ended 31 December 1998 on 18 March 1999, it reported  a
16.7% increase in turnover to £1,322.4m and an operating profit,
before   exceptional  costs  of  £95.6m  -   up   14.4%.    With
approximately 17,000 employees, the Group delivers high quality,
value for money coach, bus, airport and passenger rail services.
Over  520  million  journeys were made by passengers  using  its
services during 1998.
 
Since  its  flotation on the London Stock Exchange in 1992,  the
Group   has  expanded  through  the  acquisition  of  businesses
privatised by national and local Government. During this time it
has  developed a strong reputation for successfully transferring
these companies from the public to the private sector.
 
The  Group is committed to achieving customer and revenue growth
through   five   key   objectives;  delivering   high   quality,
accessible,  value  for  money services to  the  highest  safety
standards,  improving standards of reliability, punctuality  and
other    important   elements   of   operational    performance;
establishing   Quality  Partnerships  with  local   authorities;
integrating different modes of transport and reinvesting profits
for long term growth.
 
Coaches
 
The  coach  division consists of three business  segments  -  UK
Express Coaches, Airport Coach Services and European Coaches.
 
Express Coaches provides Britain's only scheduled express  coach
network  to  over 1200 destinations.  Airlinks operates  premier
scheduled  coach services between all of the UK's  airports  and
dedicated services for the four London airports and key  airline
operators. Eurolines operates scheduled coach services from  the
UK to over 500 destinations in Continental Europe.
 
Buses
 
The  Group  operates  urban bus networks in the  West  Midlands,
Scotland  and Belgium.  Its core operation, Travel West Midlands
(TWM),  represents  the UK's largest urban bus  network  outside
London.  Its fleet of 1,800 vehicles serves 350m passengers each
year, 18 hours a day, 7 days a week across 500 routes.  TWM will
also  operates the new Midland Metro light railway rapid transit
system  which  is  due to begain operating earlier  this  yearin
1999.  Travel Dundee in Scotland, with its fleet of  133  buses,
delivers high frequency, high load services.
 
The  division has systematically been replacing its  fleet  with
new vehicles including low-floor, easy access buses, gas powered
vehicles   and   high   capacity,  two-coach    articulatedcoach
articulated  buses. By the end of 1999, 30% of  its  fleet  will
consist   of  these  state-of-the-art  vehicles  -  the  largest
proportion in the UK.
 
Airports
 
The  Group owns East Midlands Airport, England's fourth  largest
regional airport and one of the UK's leading air cargo gateways,
and  the smaller Bournemouth Airport.  Since its acquisition  in
1993, East Midlands Airport has achieved over 30% growth in
passenger  numbers  and has been the subject  of  a  substantial
investment programme to meet growing passenger numbers and cargo
volumes.
 
In  1998, the Group was selected as the preferred bidder for the
99  year  lease for Stewart International Airport  in  New  York
State,  which  will  be  the first airport  in  the  USA  to  be
privatised  under the 'Pilot' privatisation programme.  After  a
protracted period of high-profile public consultation, the Group
anticipates that full completion, will occur late in 1999.
 
Trains
 
The  Group  owns the largest number of train operating companies
in the UK, with five passenger rail franchises - Central Trains,
Gatwick Express, Midland Mainline, ScotRail and Silverlink.   It
is  also  the  leading  member  of  the  joint  venture  company
appointed by the British Government to manage Eurostar UK, along
with the French and Belgian railway companies - SNCF and SNCB  -
and  British  Airways.   Since acquisition,  the  Group's  train
companies  have  recorded considerable passenger growth,  placed
orders for 113 new trains worth over £300m and introduced a wide
range  of  new  and  innovative  service,  fares  and  marketing
initiatives.  The division is focused on continuously  improving
operational performance and, according to the statistics  issued
by  OPRAF  (the Office of Passenger Rail Franchising),  ScotRail
provides  the  most  punctual  and  Midland  Mainline  the  most
reliable services in the UK.
 
In June 1999, National Express was awarded three franchises to
operate passenger train and tram services in Melbourne and
across the State of Victoria in Australia.
 
 
2. National Express Group, USA
 
Since  September 1998, National Express Group has established  a
strong presence in the USA's student transportation sector.   In
September  it  acquired  Crabtree-Harmon Corporation,  then  the
seventh  largest  school bus operator  in  the  USA,  for  £8.9m
($14.5m),  with  an  additional,  deferred,  performance-related
consideration of up to £2.8m ($4.5m), payable over the next two
years.   Crabtree-Harmon operates 82 school bus contracts mainly
in  Missouri but also in other Mid-West States such  as  Kansas,
Iowa,  Oklahoma,  Utah  and Colorado.  With  a  fleet  of  1,200
vehicles, it employs 1,500 drivers and chaperones and transports
106,000 pupils each day.
 
In  February 1999, the Group purchased Robinson Bus Service Inc.
for  £10.2m ($16.7m), with an additional deferred consideration
of  £4.0m ($6.5m) payable during the next two years. Robinson,
based  in Chicago, has a fleet of 547 vehicles and 642 employees
who transport 70,000 pupils each day.  It operates contracts  in
the cities of Chicago, Detroit and Philadelphia.
 
In  July 1999, the Group purchased Kenneth E Bauman Bus, Inc for
an  undisclosed  sum. Bauman Bus operates some 350  vehicles  in
Pennsylvania.
 
The acquisition of Durham Transportation will secure the Group's
position  as the third largest operator in the sector and  gives
it   considerable  critical  mass,  with  a   total   fleet   of
approximately  5,500  vehicles  operating  in  14   states   and
transporting  630,000 students each day - over 115  million  per
annum.
 
3. The USA student transportation market
 
Over 8bn trips are made each year by 55% of school aged children
on  the  435,000  dedicated yellow school  buses  which  are  in
service  on  the USA's roads.  Estimated to be worth  $13bn  and
with  435,000  vehicles,  this industry represents  the  largest
system of public transportation in the USA.
 
It  is  also  a growing market, with a rising student population
predicted  for  the next 15 years.  Opportunities for  expansion
within  the sector are considerable.  Over two thirds of  school
bus  service contracts are still in the public sector while  55%
of  the  private  contracts are serviced by approximately  5,000
operators.   Consequently, there is considerable  potential  for
converting  more services from the public to the private  sector
and further consolidation of a highly fragmented market.
 
Individual  school  districts determine  whether  their  schools
contract-out  or  operate  their own services.   They  determine
policies  and operational service quality levels, which  reflect
local  and federal motor vehicle, education and other laws.   In
the   event   of   contracting-out   they   will   prepare   bid
specifications  tailored to their needs and award  contracts  to
the  successful bidder which range from 1-5 years  in  duration.
Federal  standards apply to the specification and  manufacturing
of the dedicated school bus vehicles.