Avanza and Grupo Francisco Larrea, two of Madrid’s traditional regular passenger transport operators, have joined forces to bid together in the mega-tender launched by the Madrid local government to renew regional bus concessions. This activity, with a 10-year operating period, is expected to generate approximately €8 billion in revenue, making it the largest contract of its kind in the EU.
The agreement between Avanza and Francisco Larrea is limited to the Madrid tender and, specifically, to one of the most attractive lots: the one encompassing connections between the capital and towns in the northern part of the province. This concession has a demand of around 14 million trips annually, an associated revenue of over €600 million, an EBITDA of around €10 million, and a net profit of approximately €22 million.
Francisco Larrea, advised by Mergers Alliance partner in Spain, has thoroughly reviewed its new strategy and opted for a collaboration agreement with Avanza, after ruling out other options, such as bringing in new partners to the company’s capital. Founded in 1926m with approximately 153 employees, and a fleet of more than 80 buses, Francisco Larrea manages the regular intercity bus service in Madrid, connecting it with several towns in the Northwest, carrying 5 million passengers annually. The company has an annual turnover of approximately €20 million and an operating profit (EBIT) of nearly €8.5 million last year.
The transaction takes place in a context of ongoing consolidation and transformation of the Spanish passenger transport sector, driven by the upcoming new concession framework in which routes will be reorganized into fewer but larger contracts, requiring greater scale and strategic alliances to ensure competitive positioning and success in the bidding process, as well as the need to meet increasingly demanding operational requirements and invest in low- and zero-emission fleets. The collaboration combines Francisco Larrea’s strong local presence and operational expertise in the Madrid region with Avanza’s scale and financial capabilities, creating a competitive platform to pursue one of the key mobility contracts in the area.
