* National Express reports 9 pct fall in pretax profit
* Say 2012 "difficult" year for UK coach business
* Total dividend payout rises by 3 pct to 9.7 pence a share
By Alice Baghdjian
LONDON, Feb 28 (Reuters) - UK-based bus, coach and trains operator National Express Group reported a 9 percent drop in profits on Thursday after the removal of a government subsidy on coach fares left it with a million fewer elderly passengers last year.
Calling it one of the toughest years in the history of its coach business, Britain's largest scheduled services operator said a key factor behind the profit fall was the ending in November 2011 of subsidised half-price travel for the over-60s as part of government spending cuts.
"This made 2012 one of the most difficult years in National Express Coach's 40-year history and has driven the decline in National Express Group's operating profit," said the company's chief executive Dean Finch.
Operating profit for the group's UK coach business fell 40 percent to 20.6 million pounds, the company said, as 1 million fewer journeys were made as a result of the withdrawal of the government's 16 million-pound 'senior citizen concession scheme', the company said.
Rising fuel costs, economic recession and austerity in key markets also weighed on profits at the group, which also operates bus and coach services in Spain, Morocco and North America and rail services in the UK.
Rail revenues last year fell 70 percent to 195.1 million pounds, after National Express lost the East Anglia train operating franchise at the start of 2012.
However, the company reported a 19 percent increase in revenues for its United States business, which includes its Petermann school bus service acquired in 2011, and posted an overall group pretax profit of 164.1 million pounds ($248 million), down from 180.2 million in 2011.
This beat the consensus forecast by analysts of 156 million pounds according to the company's own survey, and it raised the total dividend payout by 3 percent to 9.7 pence a share.
Its shares, which slumped in October after it gave a cautious 2013 outlook, were up 12 percent at 219 pence by 1400 GMT on Thursday.
"We see modest positive implications for 2013 consensus EPS - particularly given the extent of progress in North America, both organic and from the excellent performance of the Petermann acquisition," analysts at Citibank said in a note.
Finch said on a conference call with reporters that the company saw growth in all of its businesses, but that Spain would continue to struggle against a backdrop of economic uncertainty and austerity.
"I think our Spanish business will have to grow to stand still at the EBIT line. I think it can grow but that growth is not going to come exclusively from the domestic Spanish market, it will be from things like expansion in Morocco," Finch said.