Keolis SA

1908–2002

Keolis SA is counting on leveraging its position as France's leading private public transportation operator to become a major European intermodal passenger transport group. Created from the merger of the Paribas banking group's VIA GTI and French rail agency SNCF's subsidiary Cariane, Keolis operates the public transportation networks for nearly 90 French cities, as well as the interurban bus networks for more than 65 departments (a French department is equivalent to a county in the United States). As such, the company controls a fleet of more than 10,000 buses. Keolis is also a major operator of tramways and subways in France, excluding Paris, with more than 66 kilometers of automatic, driverless tramways under its control, notably in the cities of Lille, Lyons, Rennes, and Laon, with plans to initiate service in Caen and in Thessalonika in Greece. Keolis also operates more than 14 kilometers of standard tramways. Other Keolis offerings in France include transport-on-demand services, such as a contract to provide transport services for the Paris airport's 55,000 employees; transportation for persons with impaired mobility; airport transportation linkage services, providing airport-to-city and long-distance transportation; airport operations, including passenger ticketing and baggage handling as well as freight handling; and, lastly, shipping services to the Brittany islands. Fifty percent of Keolis' 2001 revenues of EUR1.4 billion came from its French urban sector operations, while 25 percent was generated in France's interurban sector, chiefly through the company's bus services. Since the late 1990s, however, Keolis has been pushing onto the international public transport scene, notably through the operation of passenger train services, such as the Thameslink line, in conjunction with the Go Ahead Group, the 250-kilometer Bedford-Brighton rail line; the suburban rail network for Stockholm, Sweden; 150 kilometers of local routes in Bielefeld and Freiberg, in Germany; and the Synthus rail network in the Netherlands' Gelderland region. In just five years, Keolis has built up more than 700 kilometers of rail operations in five countries. The company has also extended into North America through a 40 percent stake in busing group Slivia and a 75 percent stake in Quebec's Orléans Express. The company plans to raise its international operations from 25 percent of its sales in 2001 to as much as 50 percent of revenues in the early part of the century. Primary shareholder in privately owned Keolis is SNCF, the group's "reference" shareholder, with nearly 44 percent of the company's shares. Paribas, which holds more than 48 percent of Keolis, has indicated its intention to exit the group's capital by the end of 2002.

Building a Public Transport Leader

Keolis' route to becoming France's leading interurban, multimodal public transport provider started at the beginning of the twentieth century, as automobile makers sought to adapt the internal combustion engine for the needs of public transportation purposes. The first buses appeared in the first decade of the new century, and, by 1908, a new company had been formed, the Société des Transports Automobiles (STA), which, among other activities, began operating bus lines.

In 1919, the STA created a new subsidiary, Société Générale des Transports Départementaux (STGD), which became the forerunner of the later VIA GTI. Initially providing interurban bus connections, STGD added other operations, including a bus tours wing, Transcar, employee transportation services, and school bus services. The company also began operating international bus routes.

Bus transportation rapidly grew into a challenger to France's railroad system. Still reeling from damage inflicted during World War I, the country's various railroad networks were all operating at a loss. The arrival of new bus lines, and the growth of the bus as a rival public transportation system particularly in the interurban and inter-departmental circuits, continued to depress the country's railroads throughout the 1920s. The onset of the Great Depression dashed any hopes of a return to profitability of the rail lines. With the country's rail system in disarray, the French government decided to nationalize the railroad, merging the various railroad networks into a single body in order to create the government-controlled Société Nationale des Chemins de Fer Français (SNCF) in 1938.

Requisitioned by the German occupation forces during World War II, the SNCF benefited from the disruption of normal bus services. In 1942, the railroad body created a new subsidiary, Société de Contrôle et d'Exploitation de Transports Auxiliares, or SCETA, which began providing linkup bus services with the SNCF's train system, as well as other transportation services. In the postwar years, tourism became a major part of the subsidiary's operations, while the company also developed a strong busing component. Those operations were brought under subsidiary Cariane, created in 1988.

In 1919, the STA created a new subsidiary, Société Générale des Transports Départementaux (STGD), which became the forerunner of the later VIA GTI.

1971–1988

French shipping group Compagnie de Navigation Mixte had diversified its holdings by the late 1960s, stepping into land transport with the acquisitions of STA and then SGTD. In 1971, these two groups were merged to form a new company, Générale de Transport et d'Industrie (GTI). This company then adopted a new brand, VIA, in order to unite its various passenger and freight transportation activities.

Under Compagnie de Navigation Mixte, GTI, which became known as VIA GTI, expanded rapidly. With the purchase of Transexel, a company which specialized in urban passenger transport, in 1981, VIA GTI became France's largest non-rail public transportation provider. The group scored an important first in the early 1980s with the inauguration of the world's first automatic, driver-less tramway system in Lille in 1983. Another important part of the group was its industrial vehicle and truck rental division, VIA Location.

Merging Public Transport Operators in the 1990s

By the beginning of the 1990s, VIA GTI's revenues topped FFr6.5 billion (equivalent to approximately EUR1 billion). Compagnie de Navigation Mixte, by then itself a diversified conglomerate, led VIA GTI on its own diversification run during the 1980s and into the early 1990s, bundling, among other acquisitions, the parcel delivery and messenger service France Express and the security transport services group Brink's France into VIA GTI. Another branch under development was VIA Voyages, which raised itself to the number three rank among France's business travel agents. Yet these moves, particularly the addition of money-losing Brinks, began to weigh heavily on VIA GTI and its parent company into the mid-1990s.

The arrival in the 1980s of the SNCF's new high-speed train system, the TGV, and its full-scale rollout in the 1990s raised a new threat to France's public transportation providers. By the end of the 1980s, the industry was undergoing a massive consolidation, as five major groups, including VIA GTI, emerged as leaders of the French market. For its part, SNCF had joined in the fray with the creation of its dedicated public transport subsidiary Cariane, in 1988, which was placed under SCETA.

Cariane quickly went on its own acquisition drive, growing into a group of more than 30 regionally operating companies--more than 70 percent of Cariane's revenues at the time came from its regional and international bus operations. Cariane was also present in the Convergence consortium, in partnership with rivals Transdev and Verney, which gave it a share in an additional 35 regional bus lines and in the development of a new express bus route to be operated on the country's Autoroute freeway system.

1991–1999

Cariane made a number of significant acquisitions in the early 1990s. The purchase of Athis-Cars in 1991 not only gave it one of the last of the major independent transport groups in France but also boosted its operations in the Parisian perimeter region. The following year, Cariane acquired the Compagnie Française de Transport de Voyageurs, another major provider of urban and interurban bus routes in the Paris region, and boosted the share of urban operations in Cariane's revenues to more than 30 percent. By then, Cariane, with revenues of about FFr1 billion (EUR150 million) in 1992, had largely broken away from its original role as a provider of bus support services for the SNCF rail system, which accounted for less than ten percent of its operations.

Cariane nonetheless lagged behind VIA GTI, which claimed half of the country's urban market (excluding Paris, controlled by the RATP), and as much as 15 percent of France's interurban market. VIA GTI had also made its first, although hesitant, move into the international market, with a modest entry into Spain and the internationally operating bus line Eurolines. Yet the diversification drive of VIA GTI, and parent company Compagnie de Navigation Mixte, turned sour by the mid-1990s.

By 1996, much of VIA GTI's operations, with the exception of its public transport branch, was losing money. In that year, Banque de Paribas took control of Compagnie de Navigation Mixte. By 1997, Paribas had begun cleaning up VIA GTI, disposing of its diversified holdings--including VIA Location, VIA Voyages, and Brinks--and regrouping the subsidiary around its core public transport business, VIA Transport.

The reenergized VIA GTI quickly sought out new expansion targets. Locked out of railroad transport in France, VIT GTI was tempted to extend itself into that transport category by the liberalization of the railroad industry in other European markets. In 1997, the company formed the Go VIA partnership with the United Kingdom's Go Ahead Group and won the contract to operate the Thameslink rail line. VIA GTI's rail success continued into 1998, as the company won the contract to operate the suburban rail network outside of Stockholm, Sweden, and then, as majority shareholder in the Eurobahn GmbH partnership, won its bid to operate two regional railroads in Germany.

VIA GTI's growing international rail operations caught the attention of the SNCF in 1999. By the end of that year, SNCF had negotiated a takeover of VIA GTI, acquiring nearly 44 percent of the transport group--and becoming VIA GTI's "reference" shareholder. Paribas, which maintained a 48 percent stake in VIA GTI, planned nonetheless to exit the company's capital entirely.

Following the acquisition of its stake in VIA GTI, SNCF merged that operation with its Cariane subsidiary, forming a new group, VIA Cariane. The new company operated in 85 communities throughout France, with interurban operations in 64 departments, in addition to a growing European rail presence. In addition, the company had by then added operations in the Netherlands, with the Synthus rail network serving that country's Gelderland region.

2001–2005

Via Cariane changed its name to Keolis in April 2001, as part of its plans to position itself for further European expansion. Indeed, further expansion opportunities in France appeared limited, given Keolis' dominant position in that market. Nonetheless, the company continued to look for ways to strengthen its French coverage and in May 2001 acquired Sera, the largest independent bus company in the Aquitaine (Bordeaux) region. Other acquisitions followed, boosting Keolis' operations in the Midi Pyrenees, and in the Parisian region.

Meanwhile, the continued liberalization of the European transport market presented still greater opportunities for Keolis, as that market--that is, transport operations opened to private companies--was expected to be worth nearly EUR30 billion by the end of the decade. Keolis scored a new railroad success in England when the GoVia partnership won the contract to operate that country's South Central line. The partnership also appeared a frontrunner in the race to win the Northern Rail franchise.

While Keolis continued to deploy its European expansion strategy, the company also began looking farther abroad, seeking out "culturally similar" markets. In 2001, the company made a first move into Canada, particularly the French-speaking region, when it launched a new busing subsidiary, Slivia. In 2002, Keolis achieved a still more solid position in that market when it acquired Quebec's interurban transport provider Orléans Express, that market's leading commuter transporter. Back in France, the company's expertise in tramway systems, and especially automated tramways, had helped it acquire the operating contracts for a number of cities, including Rennes, starting in 2002. Yet this activity too presented international possibilities--the company was awarded the contract to run the Thessalonika, Greece, automated metro, slated to become operational in 2005. Keolis' multi-modal strategy had placed the company on the European transport market's fast track.