PUBLIC transport group National Express said today that the “good progress” reported for the first half of 2010 had continued into the third quarter of the year.

The group, which recently secured an extension to its National Express East Anglia rail franchise, said it had “delivered strongly against its recovery targets” during the three months to September 30.

“We have achieved overall revenue growth despite a continuing backdrop of challenging economic conditions,” said the group in an interim management statement. “Margin improvement has been good, driven by our cost reduction, operational efficiency and yield management initiatives.”

National Express said its rail business, which also includes south Essex commuter route c2c, had achieved underlying revenue growth of 7% during the third quarter, with profitability continuing to grow.

Progress within its UK bus business had been “excellent”, with underlying revenue up 2% and passenger revenue per mile 5% ahead compared with last year’s third quarter, while at the group’s UK coach division underlying revenue was 4% up.

Revenue from the group’s Spanish bus business had remained broadly flat but its North American business had returned to growth during the quarter, with successful bids for new routes contributing to a 5% improvement in net revenue.

“We remain on track to achieve the board’s profit expectations for the 2010 full year,” the statement added.

“The group reconfirms its expectation of a return to dividends at year end, subject to final overall trading performance.”

Dean Finch, chief executive of National Express, said: “Whilst the economic outlook remains challenging, National Express is well placed to drive margin improvement through its growth, yield management and cost control initiatives.

“We are making great progress in UK Bus, Rail and North America, whilst delivering strong, stable returns in our other two businesses, Spain and UK Coach. We are driving real improvement for shareholders and customers alike.”