BUS operator Stagecoach has plunged into the red after the value of a recently-acquired US business plummeted.

The company, which operates buses throughout the North-East and was founded by brother and sister team Brian Souter and Ann Gloag, lost £316.5m last year, it announced yesterday.

A total of £376m has been written off relating to Coach USA, bought two years ago for £1.2bn, but now worth less than the purchase price.

Stagecoach also owns 49 per cent of Virgin Rail and said it had suffered losses through the disruption following the Hatfield crash last year.

Chief executive Keith Cochrane said the Coach USA loss would be written off against profits, but defended the purchase of the American operator.

He said: "I do not regret buying Coach USA. The North American market still has opportunities for us.

"But, with the benefit of hindsight, we obviously have paid too much for the business, given its performance as it is today."

Stagecoach said Coach USA had not met the profit expectations it had envisaged at the time of its acquisition and admitted overall trading performance there had "clearly been disappointing".

The £316.5m loss compares with a £182.3m profit in the previous 12 months, to April last year.

Stagecoach said its share of operating losses at Virgin Rail amounted to £2.8m, compared to a £14m share of profits the previous year.

But its other rail company, South West Trains, fared better, seeing operating profits rise from £39.3m to £45.6m.

Profits in Stagecoach's UK bus operations fell from £73.4m before one-off costs to £80.8m.

Industrial action over pay and conditions had put operating margins under pressure.

Shares in the firm rose despite the losses, up by 11 per cent to 71p.

Analysts said pre-tax profits before one-off charges and the write-off were ahead of expectations at £122.9m, against £244.3m the previous year.

The lower profits were expected because of the sale last year of Porterbrook, its train leasing company, and analysts had pencilled in a figure of about £106m