Go Ahead is considering pulling out of the Birmingham bus market after writing off the entire value of its Go West Midlands bus operation.

In its interim results statement, Go Ahead said the West Midlands business was loss making and wrote down its value by £8.2m, despite having paid just £4.5m for the operations in 2005 and 2006.

Chief executive Keith Ludeman told Transit that the write down reflected an assessment of the complete carrying value of the Go West Midlands assets and liabilities - "the vehicles, onerous lease obligations, everything".

He said he had decided to write down the business in one hit, rather than doing so in chunks so that the group's current review of Go West Midlands could start with a blank sheet of paper, making it easier to consider all options.

"That's a reflection of my style and also that of my new finance director,"Ludeman said. "Get the bad news out of the way and move on."

He attributed Go Ahead's difficulty in making an impression in Birmingham to the dominance that Travel West Midlands is able to exert through its network card which had given it "a stranglehold on the market for 22 years".

He believes Go West Midlands can become a viable business, but the big question for the review is whether profits can ever reach an acceptable level for Go Ahead given TWM's dominance. "It does make it difficult for people to break in because what you have to live on is contract revenue, on-bus revenue and concessionary fares," Ludeman said. "That is enough to run a good business and we make profits in parts of Go West Midlands' operations. The question is whether that is good enough for Go Ahead which makes industry leading margins with the youngest bus fleet of any transport group."

The situation at Go West Midlands contributed to an 18% fall in Go Ahead shares which Ludeman said was "mystifying".