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Coach and rail operator National Express has reported a sharp rise in annual profits, thanks in large part to giving up the loss-making East Coast rail franchise.

Pre-tax profit for 2010 was £160.5m, up 38% on the £116.2m the company made in 2009. Revenue fell by 22% to £2.1bn, also due to axing the East Coast line.

The company said it was restoring dividends that were cancelled in 2009.

"This is a renewed company," said chief executive Dean Finch.

"Our much-improved financial performance provides a platform to drive further growth, continue targeted investment and restore dividend."

National Express gave up the East Coast Main Line in November 2009 after passenger numbers fell during the downturn. The line is now operated by the government.

The company set out a two-year recovery plan in February last year. Mr Finch said the firm was ahead of the plan, and had delivered improved margins and "established a sound financial foundation".

The company said it was embarking on a £250m investment programme, which includes 120 new buses every year for five years, including 18 hybrids, and 140 new coaches.

It added that it had sold 10,000 tickets for the Royal Wedding day, on which it will lay on 1,000 buses and coaches to transport people from across the country to London. It said it expects to sell 50,000 tickets.

The company operates more than 1,600 buses and employs 5,800 people in the West Midlands and Dundee, while its coach operation employs 1,600 people. It also runs services in North America and Spain.