Kelsian Group (ASX:KLS) said that Transport for New South Wales (TfNSW) will begin direct negotiations with Transit Systems West for a new short-term contract to operate Sydney's Region 6 public bus services, according to a Monday filing with the Australian bourse.

The unit's existing Region 6 contract with TfNSW, for the operation and maintenance of 566 buses from four depots, will generate about AU$219 million in revenue for the fiscal ending June 30, the filing said.

If negotiations for the new contract succeed, Transit Systems will continue operations beyond the current contract's June 30, 2026, expiry, the filing added.

If no agreement is reached by the middle of the year, TfNSW will proceed with a competitive tender for the bus contract, the company said.