FirstGroup, the bus and rail company, has seen its shares jump over 15% following a boost to profits from property sales and a bullish prediction that it will meet full year targets.

The company, which operates the First Great Western and First Great Eastern rail franchises, said it had also been invited to bid for the new TransPennine Express franchise by the Strategic Rail Authority (SRA).

Passengers are returning to the railways

Moir Lockhead, chief executive FirstGroup

For the six months to 30 September, FirstGroup's operating profits were up by 1% from £83.8m to £84.4m. But after taking into account property disposals, profits leapt 50% to £52.9m.

Chief executive Moir Lockhead said: "The group's strong cash flow puts us in an excellent position to invest for growth."

Bus stalls

Mr Lockhead said the company, which also operates in the US and North America, was on track to achieve its objectives for the rest of the year.

"Passengers are returning to the railways," Mr Lockhead said.

However, he said profits in the rail division were flat because of lower government subsidies and increased costs.

FirstGroup is the second largest school bus operator in the US

The company's bus division has benefited winning more contracts in London.

Analysts said the division, the UK's biggest bus operator, was likely to benefit from the introduction of congestion charges in the capital next year, which would push more passengers to use public transport.

FirstGroup is also one of the biggest school bus operators in the US and Canada.

But profits in the division were hit by higher insurance costs.

Mr Lockhead said: "We expect to see some recovery in the second half (of the year)."

Shares jumped 16% or 33p to 243p in early trading.