Passenger Trains > FL: A closer look at BrightLine finances

The Palm Beach Post, which is owned by a unit of Fortress Investments, takes a look at cash flow and sources of funds. Their writer asks a former director of Rail America for comments. RA has been, and Florida East Coast is, owned by Fortress.

He says maybe a year without new funding. And offers his reasoning.

The failures of the IPO and the bond offerings made visible the reluctance of investment managers to commit significant cash to the venture.

https://www.palmbeachpost.com/news/20190218/after-failed-ipo-brightlines-finances-troubled-experts-say

Posted from Android


(Edited to reflect ToledoPatch's comment. I thought the close alignment of interests might not be apparent to the casual reader.)



Edited 1 time(s). Last edit at 02/18/19 09:14 by Lackawanna484.

RailAmerica did not own FEC. Fortress Investments owned both RailAmerica and FEC. It sold RailAmerica to Genesee & Wyoming, then sold FEC to Grupo Mexico.

Lackawanna484 Wrote:
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> The Palm Beach Post, which is owned by a unit of
> Fortress Investments, takes a look at cash flow
> and sources of funds. Their writer asks a former
> director of Rail America for comments. RA is a
> former owner of Florida East Coast.
 

Sounds like they will eventually need some goverment contracts/subsidies whether it be state or federal. Go after Amtrak’s San-Lax corridor which they already plan to operate someday along with Lax-Vegas. The States currently aren’t happy with Amtrak/Anderson, nows the time to take advantage of the hostilities. The Hoosier States on the chopping block again, Indiana has shown they’re willing to play ball with non Amtrak companies (crappy route but easy 4x a week schedule).  Bid for the SWC in 2020 I bet they could get a consist together in 18
months .  It’s not their game plan but real estate alone won’t suffice, Brightline seems to have a good head on their shoulders so maybe they can take many pieces,  real estate included and make a full puzzle. 



Edited 1 time(s). Last edit at 02/18/19 08:03 by Flyer92122.

Sir Richard Branson has a net worth of only four or five billion dollars (USA), so his pockets are not deep enough.

Maybe he has some wealthier friends which he can get interested in the venture. 

 

Free advice to Sir Richard on how to make a billion dollars: Start with five billion dollars, create a passenger railroad, then wait a few years.

Lurch_in_ABQ Wrote:
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> Free advice to Sir Richard on how to make a
> billion dollars: Start with five billion dollars,
> create a passenger railroad, then wait a few
> years.

It might already be working. When I checked his net worth a few months ago, five billion was popping up. When I rechecked that number before making my post above, four billion was  more common.

Well, well, well, a negative cash flow of $6.8 million/month!
And they want to borrow more to cover losses?
I thought that the IPO was for capital dollars?
No company can survive with those losses!
I doubt if the Orlando business would be enough to stem the tide either.
Even if central Florida did fairly well, they would eventually want to dump it,
and concentrate on the real estate profits.

Lurch_in_ABQ Wrote:
-------------------------------------------------------
> Free advice to Sir Richard on how to make a
> billion dollars: Start with five billion dollars,
> create a passenger railroad, then wait a few
> years.

??. More like start with five billion, create a passenger railroad.....wait a few years......then decide how best to liquidate what remains of said enterprise. 

Kinda like what the farmer said after he won the lottery......I'll just keep farming until the money runs out. 

mp51w Wrote:
-------------------------------------------------------
> Well, well, well, a negative cash flow of $6.8
> million/month!
> And they want to borrow more to cover losses?
> I thought that the IPO was for capital dollars?
> No company can survive with those losses!
> I doubt if the Orlando business would be enough to
> stem the tide either.
> Even if central Florida did fairly well, they
> would eventually want to dump it,
> and concentrate on the real estate profits.
Not to anyone's surprise, the real estate is walled off in a different subsidiary.

Posted from Android

toledopatch Wrote:
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> RailAmerica did not own FEC. Fortress Investments
> owned both RailAmerica and FEC. It sold
> RailAmerica to Genesee & Wyoming, then sold FEC to
> Grupo Mexico.
>
> Lackawanna484 Wrote:
> --------------------------------------------------
> -----
> > The Palm Beach Post, which is owned by a unit
> of
> > Fortress Investments, takes a look at cash flow
> > and sources of funds. Their writer asks a
> former
> > director of Rail America for comments. RA is a
> > former owner of Florida East Coast.
>  

I am also under the impression that Fortress Group partly owns (not wholly owns they have a couple of seats on the Board) the holding company that owns a gazillion papers, among them is the Palm Beach Post.

The article reads like mostly speculation by people who don't appear to have much inside knowledge.

Then again, FEC in all its forms and Fortress both have a checquered past when it comes to being honest about anything that they do too. So we will only know for sure when the proverbial fat lady sings, or not.

I doubt though that Branson's assets has much to do with any of this. It is mostly Fortress and through them Softbank that is more relevant. Branson will never risk more than 10% of the value of the company that uses the Virgin name. Very few companies using the Virgin name actually have majority holding by Banson and is often10% or less holding by Branson or related interests. This one for example is handled by an obscure outfit incorporated in one of the islands somewhere.

Gatehouse Media is the intervening company in the Palm Beach Post ownership.

Posted from Android

Losing over $300,000 a day...every day. Day in and day out. Sounds like a great investment !

DTrainshooter Wrote:
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> Losing over $300,000 a day...every day. Day in and
> day out. Sounds like a great investment !

I mentioned in the trip report last week that the staffing is that of a luxury hotel.  A huge staff, people everywhere. Helpful, extremely pleasant.  The West Palm Beach and Miami stations were overflowing with helpful staff.  Greeting, scanning, helping, selling food, guiding people to the proper coach, etc. 

Everything about this operation exudes high end, except the prices charged...

Private investors have zero interest in passenger rail.  As they say,  'it doesn't pencil' 

Lackawanna484 Wrote:
-------------------------------------------------------
> DTrainshooter Wrote:
> --------------------------------------------------
> -----
> > Losing over $300,000 a day...every day. Day in
> and
> > day out. Sounds like a great investment !
>
> I mentioned in the trip report last week that the
> staffing is that of a luxury hotel.  A huge
> staff, people everywhere. Helpful, extremely
> pleasant.  The West Palm Beach and Miami stations
> were overflowing with helpful staff.  Greeting,
> scanning, helping, selling food, guiding people to
> the proper coach, etc. 
>
> Everything about this operation exudes high end,
> except the prices charged...

 The way they are operating this service seems insane to me. Way too much staff at the stations, and way too many trains per day being operated with the amount of business they have. They are now running 17 each way on weekdays and 10 each way on weekends. And from what I gather most of them are sparsely patronized. They’re just wearing out equipment, paying way too much crew expense, burning excess fuel etc.  I’d think 10 Weekday roundtrips would be plenty, and maybe 5 to 7 on the weekends. This has to be burning up money like crazy.   

 way they are operating this service seems
> insane to me. Way too much staff at the stations,
> and way too many trains per day being operated
> with the amount of business they have. They are
> now running 17 each way on weekdays and 10 each
> way on weekends. And from what I gather most of
> them are sparsely patronized. They’re just
> wearing out equipment, paying way too much crew
> expense, burning excess fuel etc.  I’d think 10
> Weekday roundtrips would be plenty, and maybe 5 to
> 7 on the weekends. This has to be burning up money
> like crazy.   

Well, everyone says frequency is the ticket to getting people to ride rail transit,  so here they're trying it.

utwazoo Wrote:
-------------------------------------------------------
>  way they are operating this service seems
> > insane to me. Way too much staff at the
> stations,
> > and way too many trains per day being operated
> > with the amount of business they have. They are
> > now running 17 each way on weekdays and 10 each
> > way on weekends. And from what I gather most of
> > them are sparsely patronized. They’re just
> > wearing out equipment, paying way too much crew
> > expense, burning excess fuel etc.  I’d think
> 10
> > Weekday roundtrips would be plenty, and maybe 5
> to
> > 7 on the weekends. This has to be burning up
> money
> > like crazy.   
>
> Well, everyone says frequency is the ticket to
> getting people to ride rail transit,  so here
> they're trying it.

So far it isn’t working.  I wish them luck. Seems a lower frequency would be better until when and if they get to Orlando airport.   The mathematics of using this thing just aren’t great. We had three people go to Miami from Fort Lauderdale on Saturday. It would’ve cost us about  $50 each way, $100 total. That’s not including Uber rides in Miami., or $6 to park at Lauderdale station.

We could drive there for about a gallon of gas each way., total cost 5 bucks, plus about $25 parking. Yes I 95 is a nightmare but the cost equation just doesn’t work for multiple passengers on trips like this.

When it does work is for a single business traveler, particularly around rush hour.  It’s 2 to 3 times faster than driving at that time of day and allows a productive stress free trip. Business people are definitely using it.  They just need a lot more of them.



Edited 3 time(s). Last edit at 02/19/19 14:56 by alan2955.

Discounts are widely available on BrightLine.  I think my wife and I paid about $15 rach way West Palm to Miami.

It worked out well for us, because parking in or near the office building we visited would have been $35 on its own.

Lurch_in_ABQ Wrote:
-------------------------------------------------------
> Free advice to Sir Richard on how to make a
> billion dollars: Start with five billion dollars,
> create a passenger railroad, then wait a few
> years.

 Someone here knows more about Sir Richard than he's supposed to. :-)

utwazoo Wrote:
-------------------------------------------------------
> Well, everyone says frequency is the ticket to
> getting people to ride rail transit,  so here
> they're trying it.

The key to getting people to ride trains is going from somewhere where people are to somewhere people want to go.

Forgive me for asking, but does anyone actually want to go to downtown Miami without their own car?