THE new boss of National Express warned yesterday that there was “much to do” to revive the passenger transport group as he launched a shake-up of its “underperforming” UK bus division.

Dean Finch, who joined National Express (NX) as chief executive in February, said there was “considerable scope” to improve the bus business, with costs having grown ahead of revenues during the past five years.

He has also begun a “complete overhaul” of the group’s US arm, which runs school buses, and will take direct “hands on” control of NX’s businesses in order to drive up performance.

Mr Finch, previously with London Underground infrastructure firm Tube Lines, joined NX after a disastrous year for its rail business.

The group handed back its loss-making East Coast franchise to the Government in November after overbidding for the deal before recession struck, leaving revenues insufficient to cover hefty premium payments due to the Government under the deal.

Ministers threatened to strip NX of its other rail franchises, National Express East Anglia and south Essex commuter route c2c, but eventually settled for curtailing the deals in 2011 without exercising three-year extension clauses.

“Whilst we have much to do, National Express has a strong portfolio of first class transport businesses and the ability to deliver to its full potential over the longer term,” Mr Finch said yesterday.

And he praised the performance of the firm’s Spanish and UK coach operations and said the group had made an “encouraging” start to the year.

The detailed review of the UK bus business, which employs more than 5,000 people and includes many services in Suffolk and north Essex, found “several structural areas” for improvement, including “above average” wage costs and the need to boost margins.

NX has also strengthened its US management team, as well as appointed procurement and commercial directors for the overall group.

Mr Finch wants to create a “flatter organisation” with clearer management accountability and responsibility.

The group added that revenues so far this year had stabilised, although trading conditions remained “relatively difficult”, with full-year profits in line with expectations.

The UK business was boosted by a return to profit for the rail division during the first quarter, thanks to higher passenger numbers at c2c and the group’s exit from the loss making National Express East Coast operation.

The group’s coach arm grew revenues 1% during the seasonally quieter period, with “promising” results over a busy Easter period.