Tim O'Toole chief executive of FirstGroup which operates South Western Railways has resigned with immediate effect as the bus-to-train firm recorded a mammoth full year loss.

The company, which is also behind First Bus and Great Western Railway, reported £327 million loss in the year to March 31, which compares to a profit of £152.6 million in 2017.

Mr O'Toole said: "The time is right for me to step aside. Today's results clear the way for the new approach sought by our chairman and the board.

"I should like to thank the 100,000 employees who work so hard to deliver for our customers every day. It has been a privilege to work with them."

Shares in FirstGroup crashed over 14 per cent at the market opening yesterday.

Executive chairman Wolfhart Hauser will take the hot seat while a new boss is found, with finance chief Matthew Gregory to be appointed interim chief operating officer.

First, which employs 100,000 people, also runs the Heathrow Airport Connect service as well as the iconic Greyhound bus business in the US.

Greyhound has been struggling amid the rising popularity of low-cost airline competition, the firm said.

In addition, the firm was stung by an onerous contract provision linked to the TransPennine Express rail franchise.

Mr Hauser said the focus would be on sorting out Greyhound's issues.

"The board is examining all appropriate means to mobilise the considerable value inherent in the Group. Initial actions from its evaluation are under way, including conducting a full external review of Greyhound's business model and prospects, which will conclude in the coming months."

The group has been the subject of takeover speculation.

Earlier this year, FirstGroup rejected an offer from US private equity firm Apollo Management Canadian investor West Face Capital, which has a five per cent stake in the company, is also understood to be interested in taking a controlling share.