Kelsian secures $500M Sydney bus contract extension

Australian transport operator Kelsian Group (ASX:KLS) secured a two-year contract extension with Transport for New South Wales to continue operating public bus services across Sydney’s Inner West region.

Commencing July 1, the agreement locks in an additional $500 million in revenue over the next two years, ensuring continuity for one of the city's busiest transit networks, known as Region 6.

The deal formalises negotiations first flagged in March, when TfNSW approached Kelsian’s subsidiary, Transit Systems West, for a short-term extension ahead of the current contract's expiry on June 30.

TfNSW subsequently secured NSW government approval to extend the partnership through to June 30, 2028.

Under the terms of the agreement, Kelsian will manage the operation and maintenance of 528 buses across four major depots.

As part of the state's transition to cleaner energy, TfNSW will also supply an additional 151 electric buses to the fleet during this period.

The contract includes robust financial protections designed to safeguard the operator against macroeconomic volatility.

"As with most of our public transport contracts, there are revenue indexation mechanisms included in this contract extension, which protect the business from fluctuations in the cost base of our key cost inputs, including fuel," said Kelsian Group CEO Graeme Legh.

At the time of reporting, Kelsian Group’s share price was $4.29.