Brightline (All Aboard Florida) Orlando - Miami FL FEC fka Virgin Rail

[Paulus Magnus]

If it's over 240 miles, then $1 billion is only $4.2 million per mile. Not that much money especially compared to other contemporary rail projects.

They've already got 200 miles. They'll need PTC, which will run them about two hundred million dollars, possibly less. Rolling stock is probably no more than a hundred million. The extra 40 miles of track, presumably double tracked, will fit in fairly well at 17 mil, and keep in mind that they'll be working freight on it as well (which might be part of the reason for this: To act basically to grease the political wheels to move into Orlando for freight).

[electricron]

They've already got 200 miles. They'll need PTC, which will run them about two hundred million dollars, possibly less. Rolling stock is probably no more than a hundred million. The extra 40 miles of track, presumably double tracked, will fit in fairly well at 17 mil, and keep in mind that they'll be working freight on it as well (which might be part of the reason for this: To act basically to grease the political wheels to move into Orlando for freight).

I thought FEC already had PTC all the way from Miami to Jacksonville. They'll only need to add PTC onto the new 40 miles of track between Orlando and their mainline.
I'm not so sure they'll need to double-track all of the newly laid tracks initially, although I'm sure they will install some passing sidings. Likewise for the existing corridor. I don't think the initial frequency of service will be that high. Why whenever new passenger train services are proposed someone always suggests that double tracking that entire corridor is needed?

[Paulus Magnus]

They've already got 200 miles. They'll need PTC, which will run them about two hundred million dollars, possibly less. Rolling stock is probably no more than a hundred million. The extra 40 miles of track, presumably double tracked, will fit in fairly well at 17 mil, and keep in mind that they'll be working freight on it as well (which might be part of the reason for this: To act basically to grease the political wheels to move into Orlando for freight).

I thought FEC already had PTC all the way from Miami to Jacksonville. They'll only need to add PTC onto the new 40 miles of track between Orlando and their mainline.

The only thing I've seen is a reference to them having cab signals with speed enforcement. I believe the requirement is that they can be halted prior to running a signal which I don't know if the FEC system does. If so, then that's a good bit of money saved of course.

Why whenever new passenger train services are proposed someone always suggests that double tracking that entire corridor is needed?

They probably don't need it in truth, I'm just used to the problem that all the single track on LOSSAN causes for rail service development.

[tnbirke]

When were were trying to make an FEC coal train work for the City of Orlando, when I asked one of their Operating Department officials at what speed they planned to run 14,000 ton trains I was told that they planned to run them at the same speed they ran their intermodal and merchandise trains. Coming from the Santa Fe who at the time restricted heavy trains to 45 mphit was a surprise to think of a 60 mph coal train. It must be a true "Super Railroad" as far as track is concerned.
So other than signals, track cant and possibly PTC installation the Miami to Cocoa segment should be in good shape.
Is this the future of American passenger train service or a flash in the pan?
Tom Birkett
Bartlesville, OK

[Jeff Smith]

Very encouraging development- and timely personally and anectdotally - I just rode a privately owned intercity railway yesterday (Kintetsu Railway) from Nagoya to Osaka. I certainly hope there will be a return to privately run intercity rail service- FEC is a conservatively run outfit, one that would look before they would jump on such a venture as this.

Regarding potential rolling stock, there is Kawasaki Heavy's "K-star" 125mph push-pull design. It's fully FRA compliant, can be built in the USA (Lincoln NE), and though its still vaporware, it likely can be produced relatively quickly, as its essentially a single level version of the MARC-III design.

Once they're done with the MetroNorth New Haven M8's, that is, unless they have a ready labor pool and manufacturing line. MNRR has somewhere short of 100 cars delivered so far, leaving over 305 to go (original order of 300, option of 80, further exercise of "trailer" cars of 25). But it's nice to know there's something off-the-shelf they can run with. I'm sure some customization would be in order (car interiors) and the required run-in delivery period of so many problem free miles.

[Jeff Smith]

If it's over 240 miles, then $1 billion is only $4.2 million per mile. Not that much money especially compared to other contemporary rail projects.

They've already got 200 miles. They'll need PTC, which will run them about two hundred million dollars, possibly less. Rolling stock is probably no more than a hundred million. The extra 40 miles of track, presumably double tracked, will fit in fairly well at 17 mil, and keep in mind that they'll be working freight on it as well (which might be part of the reason for this: To act basically to grease the political wheels to move into Orlando for freight).

I was going to point the extra mileage out as well; there's only another 40. And freight capacity is a HUGE portion of it. It will be interesting to see if this happens how the entities are structured. Who owns and has the capital cost of the infrastucture? What will one entity pay the other for overhead rights? Will there be separate entities? A lot will depend upon how they can handle this for reporting and tax purposes based on appropriate federal and state regulations and tax laws.

P.s. I'm a tax professional.

[Gilbert B Norman]

While obviously FEC would want to handle freight traffic over their proposed Cocoa Orlando line, I doubt if there would be too much available. Existing industries are, by default, all located on CSX lines, although that is not to say a TOFC/Container yard could be built on the FEC. Who is to say that the FEC would be successful in compelling CSX to open those industries to FEC? If somehow successful, all they would have would be 150 mile line haul to Jax where they have to interchange to either CSX or NS. I'm not sure how far a "competitive routing" argument with the Surf Board would go when there hasn't been one for the past 45 years.

But be all that as it may, I continue to be astounded how a Class II road that is not under any obligation to operate a passenger train for any party, now ostensibly wants to operate passenger trains for their own account - including a major investment in new track mileage. I will not be surprised if there is an ulterior motive to this initiative beyond operation of passenger trains.

[Paulus Magnus]

While obviously FEC would want to handle freight traffic over their proposed Cocoa Orlando line, I doubt if there would be too much available. Existing industries are, by default, all located on CSX lines, although that is not to say a TOFC/Container yard could be built on the FEC. Who is to say that the FEC would be successful in compelling CSX to open those industries to FEC? If somehow successful, all they would have would be 150 mile line haul to Jax where they have to interchange to either CSX or NS. I'm not sure how far a "competitive routing" argument with the Surf Board would go when there hasn't been one for the past 45 years.

But be all that as it may, I continue to be astounded how a Class II road that is not under any obligation to operate a passenger train for any party, now ostensibly wants to operate passenger trains for their own account - including a major investment in new track mileage. I will not be surprised if there is an ulterior motive to this initiative beyond operation of passenger trains.

Their parent company does own a good deal of real estate along the route; passenger rail service makes it more valuable and allows them to recoup any investments involved, similar to how FEC started to my knowledge. For instance, it looks like they've got an FECR line next to 2.5 million square feet in downtown Miami cleared for mixed use development. It's also right next to a couple of Metrorail stations. It's a fantastic opportunity for transit oriented development and would likely result in higher office rents and potential hotel rates (should they build a hotel in the area). Even if they lose money on the direct operations of the train, it could easily act as a loss leader by creating higher revenues for them otherwise.

[donoteat]

Interestingly enough, the real estate they own is the site of the former FEC main depot in Miami:



It should also be a lot more central than the so-called "Miami Central Station" which the city is currently investing a billion dollars or so in. (that one's being built at the airport of all places...)

[SouthernRailway]

But be all that as it may, I continue to be astounded how a Class II road that is not under any obligation to operate a passenger train for any party, now ostensibly wants to operate passenger trains for their own account - including a major investment in new track mileage. I will not be surprised if there is an ulterior motive to this initiative beyond operation of passenger trains.

Agreed. I think that the goal is to eliminate Amtrak as an operator over its lines so that it can continue its freight business, uninterrupted.

I also think it's odd that the "All Aboard Florida" website indicates that a train operator hasn't yet been picked. Why in the world would FEC not run its own trains? (Yes, I know that there are operators such as Veolia, but FEC would be giving away its own profits, if there are any, by letting another company run the trains.)

Re: the post above about FEC's real estate: great point. I was on a transit board a few years ago and there could be billions of dollars of real estate investment along the tracks. I'd think, however, that (1) most transit-oriented development would come from commuter lines, rather than intercity lines, and (2) the government would have been approached about these things long ago, as tax-increment financing and other tax benefits can play a big role in these types of projects.

[David Benton]

perhaps FEc can see itself making money out of running passenger trains . With abit of state / federal money thrown in of course . And why shouldnt it be subsidised ???

[Gilbert B Norman]

Reference:

http://floridatransportationtoday.typep ... -sale.html

Brief passage:

• Speculators also observed that Fortress-backed Florida East Coast Railway was also either mulling an IPO or is an ideal candidate to do so, two other bankers said. Other logistics firms were named, but none were Florida based. FEC is headquartered in Jacksonville, and is operated by RailAmerica for Fortress

Gents, we should note that, to use a Gordon Gekko/Buddy Fox term, the FEC is "in play'. The owners wish to sell; if not within the private sector, then to a public agency.

http://fecrwy.investorroom.com/annual-reports

From the 2010 Annual Report available through the immediate link, one can see that the FEC made some $43M from railroad operations during 2010. However, owing to the "leveraged buyout" debt on which the debt service cost is some $66M, FEC had a Net Loss of some $23M. You could say they are on the same track with the Government owned Canadian National of thirty years ago.

Possibly the only sale, given the bleak earnings outlook, is to a public agency. What better way would there be to get "man on the street" support than to tout "we will give you some trains - and you won't have to pay for them unless you choose to ride'. Politicians since the Roman Empire have bemused the Proletariat in such a manner. Amtrak was touted as a "for profit' enterprise; again John Q Public and the officials he elected 'bought it", those of us in the industry at the time did not.

In view of that I was in a management position (hardly high up be it assured) within the industry on A-Day, I remain quite skeptical that there is any real initiative on the part of FEC's overseers to operate passenger trains for their own account. Possibly, should FEC be sold to a public agency, passenger trains, be it the proposal to operate one or more Amtrak trains or some variant of this "All Aboard Florida', there will be a better chance of such occurring.

[Jeff Smith]

Interesting analysis. Assuming you mean negative cash flow of $23m (you mentioned net loss) after debt service (before or after tax, depreciation, and amortization?) an IPO may still net them a profit based on Enterprise Value. Not sure if there's an estimate for that out there if they are privately held. Although RE, particularly in FL, has been hard hit, I imagine it's still pretty valuable. Remember Alexander's, a department store in New York? Caldors? The RE was more valuable than the operation. Potential shareholders in an IPO should view it the same way; i.e. what's the return on investment (ROI), yield, etc.

I doubt the government would buy the line. We're not talking about a lightly used excess line here like Sunrail for CSX. This is a pretty major line. Is FEC angling for infrastructure support? Maybe. Keeping Amtrak off? Maybe, but they wouldn't relinquish dispatch over their line anyway. And Amtrak isn't talking a lot of frequency anyway; one or two of the Silvers or splitting them, and we dont' even know that at this point.

Buying a line this huge I think is beyond the reach of Florida for the level of passenger traffic envisioned.

But I do think it's about positioning at this point.

[mtuandrew]

Interesting analysis. Assuming you mean negative cash flow of $23m (you mentioned net loss) after debt service (before or after tax, depreciation, and amortization?) an IPO may still net them a profit based on Enterprise Value. Not sure if there's an estimate for that out there if they are privately held. Although RE, particularly in FL, has been hard hit, I imagine it's still pretty valuable. Remember Alexander's, a department store in New York? Caldors? The RE was more valuable than the operation. Potential shareholders in an IPO should view it the same way; i.e. what's the return on investment (ROI), yield, etc.

I doubt the government would buy the line. We're not talking about a lightly used excess line here like Sunrail for CSX. This is a pretty major line. Is FEC angling for infrastructure support? Maybe. Keeping Amtrak off? Maybe, but they wouldn't relinquish dispatch over their line anyway. And Amtrak isn't talking a lot of frequency anyway; one or two of the Silvers or splitting them, and we dont' even know that at this point.

Buying a line this huge I think is beyond the reach of Florida for the level of passenger traffic envisioned.

But I do think it's about positioning at this point.

Agreed in every way. The FEC is a profitable line, if not yet showing a positive return because of the buyout. Governments are averse to purchasing and running profitable enterprises, which is why we complain so much about Amtrak losing money as a government ward I think this is a real estate deal, as posited by Gaius Paulus Magnus and others - the FEC buys or leverages the land, and makes the profit when their new transportation mode comes into play.

Secondarily, this is an instance where for a relatively small outlay the passenger line can be profitable. After all, we've noted that the proposed line will pass by, or through, Disney World, Sea World, Busch Gardens, Universal Studios Orlando, and several other tourist destinations, as well as the Orlando International Airport and the city of Orlando (and others.) The existing line also passes by KMLB, very close to KPBI, next to KFLL and not far from KMIA, within spitting distance of at least half-a-dozen universities and colleges, and of course through several beachfront towns that would be major traffic producers. Frankly though, if The Mouse is on board with the FEC's plans, they can't fail at making money.

I doubt that Amtrak itself is a major consideration, since I don't think the FEC has reason to regard the NRPC as such a canker sore as do the Big Four plus Two. However, it definitely sends a strong message to Florida's government that the Florida East Coast will do just fine without their interference, thank you very much.

[Gilbert B Norman]

The Statement of Cash Flows (how often did i use the term "cookie jar accounting' with my clients?) appears at Adobe Page 7 of the 2010 Annual Report and it shows a $1.1M increase in cash position over the prior year - all told, "cash neutral".

While on a national level, government is averse to go into profit seeking ventures in competition with the private sector, there is no law precluding them from doing so. It appears that the US Treasury has made a profit from the bailout of financial institutions just as they did from that of Conrail; the "jury is still out' with regards to those directed at the auto industry. Florida, with its conservative governance at present and that public funds have been committed to build "world class' maritime ports at both Miami and Everglades (FTL) may want the FEC to protect their investment in such and that, in a post PANAMAX world, they are competitive. An open access railroad which has a 350 mile captive linehaul to Jax, would ensure that either NS and CSX can access the traffic affording the shippers of the "competitive route" they desire and yet having a favorable division of the linehaul with FEC and its 350 miles of such.

While I have no inside knowledge of such be it assured, I think the FEC is so over leveraged that a private investor would be scared away. Even a minor recession, a Longshoreman strike, or a natural disaster, could have FEC in deep trouble. If a sale within the private sector is viable, then this passenger initiative will simply 'fade away", but if to a public agency, passenger trains are what John Q thinks railroads are all about - and maybe, just maybe, a scheduled one of one varietal or the other will roll on FEC rails.