The owner of National Express has announced that it has begun selling its North American school bus business to reduce its £1.2 billion debt, sending the group’s share price soaring.

Shares in Mobico, which changed its name from National Express Group in June 2023, closed almost 18% higher at 68 pence on the London Stock Exchange on Wednesday, slightly below its intraday high of 70 pence.

Mobico is best known for its National Express brand in the UK, where it has the largest market share in long-distance coach travel. The company also operates train and bus services in 12 countries, including Spain, Portugal, Morocco and Switzerland, and has a German rail division.

In addition to announcing the start of the formal sale process for its North American business, Mobico also reported a nearly 24% increase in first-half operating profit to £71.2 million.

Chief Executive Ignacio Garat said the sale would help Mobico achieve its primary goal of reducing its debt burden, adding that further debt reduction initiatives were planned for the second half of the year.

Garat said the company remained confident of delivering full-year adjusted operating profit of between £185m and £205m.

The North American bus company is one of the largest school bus providers in the United States, operating in 33 states and two Canadian provinces, but has struggled in recent years due to staff shortages and inflationary pressures.

Last October, Mobico announced that it was seeking to sell the company as part of its restructuring strategy after the company issued a profit warning and suspended dividend payments.

Despite recent difficulties, the US business generated an adjusted operating profit of £21.4 million in the first half of this year, up 55 percent year-on-year as a number of new routes were added.

Mobico’s debt has increased in recent years as the company suffered a series of losses following the coronavirus pandemic.

In April, the company reported a pre-tax loss of £98.3 million, an improvement on the £335 million reported in 2022.

These have contributed to the share price falling 65% in two years from 186 pence in mid-August 2022.

In an update on Wednesday, Garat said: “Mobico performed well in the first half of 2024, with continued positive passenger demand and revenue growth.

“We have successfully retained, won and mobilized significant new business in various parts of the Group, and our cost-cutting initiatives have delivered savings somewhat earlier than expected.”