ARRIVA’S chief executive was upbeat yesterday despite a 19 per cent drop in profits last year.

Releasing its 2009 results, the Sunderland-based bus and train group blamed a £60m increase in its fuel bill for the drop in profit before tax to £121.7m, down from £150m in 2008.

Weaker passenger growth than anticipated on its Cross- Country rail franchise, driven by the recession, also contributed to the lower figure.

But chief executive David Martin said: “Given the economic situation last year it is a pretty good set of results.”

Mr Martin said that escalating fuel costs were the principal cause, but they are set to drop by £30m this year due to forward fixing of prices.

He said: “With a £30m reduction in fuel costs this year, new contracts already secured and passenger revenue support available to Cross- Country late next year, I am confident that the group has excellent prospects for substantial progress.”

UK rail operating profits dropped 64 per cent as expectations for passenger revenues growth on its Cross- Country franchise proved too optimistic.

The division, which also includes Arriva Trains Wales, made an operating profit of £12.1m, down from £33.7m a year earlier.

A weak spring and flat summer meant CrossCountry revenues were up 2.6 per cent to £328m last year, compared with a figure of £371m anticipated in its 2007 franchise bid.

Mr Martin added: “The recession has hit rail passengers.

In the early part of last year people were not travelling around on the trains, but they seem to be coming back quite strongly.”

Revenues have improved 8.8 per cent in the first seven weeks this year, but Arriva says the performance is still short of the levels anticipated when it bid for the franchise.

However, Mr Martin stressed the company was not struggling with its franchise in the way National Express had with the East Coast Mainline, which it handed back to the Government last year.

The UK bus division delivered a good performance as cost controls helped it offset the £30m rise in its fuel bill.

Operating profits in UK bus were £91.2m, against £99.3m a year earlier.

Its business in mainland Europe also continued to grow with operating profits up to £83.9m from £78.5m the previous year.

Arriva recently revealed it was in talks with France’s national rail operator SNCF over a merger which could create a £6bn European firm.

The company said in January it had held very preliminary talks over a potential tieup with all or part of Keolis, which is 44.5 per cent owned by SNCF.

Mr Martin said yesterday there was nothing to add to that statement at present.