Brian Souter and his sister Ann Gloag founded Stagecoach in Perth in 1980, starting out with just two buses bought with their father's redundancy money. Souter will step down as chairman of the board, but continue as a non-executive director, the company said.

Stagecoach's shares rose as much as 7.5% on Wednesday.

The company's bid to renew existing East Midlands and West Coast rail franchises with partners was disqualified for not complying with pension funding requests. It was also left out of the South Eastern franchise, ending its UK rail operations.

"My family and I continue to have a significant shareholding in Stagecoach and I have every confidence in the management team, our strategy and the positive prospects of the business," said Souter, who along with Gloag, owns nearly 25% of the company, according to Refinitiv Eikon data.

Stagecoach reported a 9% drop in first-half adjusted pretax profit to 66.6 million pounds ($85.45 million), hit by the loss of the crucial franchises.

However, that was ahead of an estimate by analysts at Liberum, who noted that UK rail operations performed better than expected before the end of the franchises and that tax rates were lower than assumed.

Stagecoach stuck to its earnings per share expectations for 2019-20 and said it expects revenue growth at its UK bus business to accelerate for the rest of its fiscal year.

Stagecoach also sold its North American business this year, leaving it currently focused solely on UK buses and trams.

"While this has made for a simpler business, it also means the company's fortunes are almost entirely tied to its UK bus operations," said AJ Bell investment director Russ Mould.

Stagecoach said it was planning to expand into new markets and has put in a bid for the 12-1/2-year contract to operate Sweden's Roslagsbanan commuter railway running into Stockholm.

Stagecoach has appointed Ray O'Toole to succeed Souter as chairman from the start of 2020.

By Yadarisa Shabong