BUS and train group Go-Ahead's profits went up in the past year despite "extraordinarily disruptive circumstances".

The Newcastle firm saw pre-tax profits for the year to June 29 rise to £44.6m, up from £43.1m.

The group, which runs the Thameslink, South Central and Thames Trains franchises, was hit by disruption of the rail network following the Hatfield disaster as well as the high profile problems suffered by Railtrack.

Its aviation business, which provides ground-handling services, was hit by the post-September 11 impact on airlines.

Deputy chief executive Chris Moyes, said: "We are very pleased with these results, particularly as we bought into the aviation business just before September 11.

"No one could have predicted those events and the disruption that followed them.

"However, we have seen signs of a recovery in air travel and we are confident that it will continue to rise."

The group's rail business made operating profits of £17.4m, down from £17.9m the previous year.

Mr Moyes said Go-Ahead's rail division had been expanded by buying South Central from Connex last year.

But last week, the group lost its battle to be awarded a 20-year franchise on the South Central line.

The Strategic Rail Authority (SRA) proposed that the GoVia company which runs the service and is owned 65 per cent by Go-Ahead, should run the franchise only for another seven years.

Its Thameslink franchise is due to end in spring 2004 and the group said the SRA was intending to negotiate a seven-year replacement of the existing franchise.

Its Thames Trains franchise also runs to spring 2004 and the group is in talks for a two-year extension to enable it to recover profits at the franchise.

Its bus arm, which covers Tyne & Wear, County Durham, Oxford, Brighton & Hove and London, made profits of £33.3m, up from £29.2m.

Mr Moyes said the group had considered following rival transport group Arriva into the European transport market, but that the opportunities available would do nothing to enhance the business.

Instead, Go-Ahead will continue to make the most of its existing bus operations in the North-East, and particularly London, where congestion charging will be a boost to passenger numbers.

Overall operating profits at the group added up to £55.4m, a 7.4 per cent rise on the previous year