Brightline Financial Performance

The mantra is "Passenger Trains Lose Money" (repeat 10 times) is what CSX and UP say over and over again regarding there own commuter contracts and contracts with Amtrak over trackage rights. I can see where they are coming from because in reality if they admit that Class ones break even then they cant demand more more money at the negotiating table with Amtrak and the public authorities. But if in fact Brightline is making money then that blows this whole argument out of the water. But I doubt that Brightline is making any money at all and the buisness plan is a loss leader and make money in the trackside real estate business. Also how do they insure there passengers because we all know that railroad passenger insurance is outrageous

Brightline is owned by developers whose property values are increased by the service. Once the developments are settled, rents and other fees will supplement the service. Back when the urban cities were industrial powerhouses and port hubs (and before everyone had a car and an interstate highway nearby), the freight traffic producers needed workers brought to them in order to produce freight traffic. The railroads covered the cost of the passenger service because it indirectly supported revenue. Brightline is a similar model somewhat reinvented for residential/commercial developments.

Florida East Coast Industries (FECI) owns Brightline -- their entire real estate portfolio (per their website) are industrial or logistics properties, with most undeveloped land in the Jacksonsville area. (I understand that FECI sold the Florida East Coast Railway (FEC) to fund the Brightline construction.) I also understand the only properties Bright-line owns in California and Nevada are properties required to own the railroad.

So no, I think GoBrightline intends to be a profitable service in its own right, and not a way to cause other activities of its owners to generate greater revenue. Unfortunately for us, it is privately held by FECI, which is privately held by Fortress Investment Group, which is privately held by SoftBank, so I don't think we will get financial statements from them unless they are compelled to provide them as a condition of operating any of the railways they are building (I do not believe those conditions exist), or are turned into a publicly traded company.

All that said, I believe the primary reason rail passenger traffic is unprofitable in the United States is that all alternatives are subsidized (for the most part, road maintenance and construction is not covered by vehicle usage fees, roads and airports are not taxed the way railways are, and airlines have been repeatedly prevented from failing by taxpayer subsidies or bailouts while railroads have been allowed to fail).

The Shaker Hts model was that way back in 1920 Oris Paxton and Mantis James Van Sweringen, 21 and 19 respectively, were just entering the business of real estate... They bought farm land from the defunct Shaker religious sext and wanted to develop it into a trolley suburb. One Problem- The Nickle Plate right of way stood in the way of there access to downtown Cleveland. Solution- JP Morgan needed front men to take over railroads that the ICC and anti-trust crowd would not let him have more power and the Van Sweringens needed to get into downtown Cleveland. The New Gilded Class needed a Garden Suburb to get out of the smoke and grime of Euclid Ave in Downtown Cleveland. So the Entire Nickle Plate railroad was sold to the Van Sweringens to make way for a 10 mile trolley line aka "The Rapid" into Downtown Cleveland along with a huge Grand Station (Terminal Tower) to go with it. In about 10 years time the young brothers had control of the Erie, The C&O, The Wabash Ect...Untill the Crash of 1929 in which the young brothers carried on until 1938 or so and died within a few days of each other.

Railroads by law are required both publicly traded and private held ( like Guilford was) to provide reports of financial fiitness to the STB and FRA. So yes the info for is buried in DC somewhere In a metal filing cabinate in some cubical at the STB

sextant wrote: ↑Wed Oct 19, 2022 11:16 am The mantra is "Passenger Trains Lose Money" (repeat 10 times) is what CSX and UP say over and over again regarding there own commuter contracts and contracts with Amtrak over trackage rights. I can see where they are coming from because in reality if they admit that Class ones break even then they cant demand more more money at the negotiating table with Amtrak and the public authorities. But if in fact Brightline is making money then that blows this whole argument out of the water. But I doubt that Brightline is making any money at all and the buisness plan is a loss leader and make money in the trackside real estate business. Also how do they insure there passengers because we all know that railroad passenger insurance is outrageous

Thank you for sharing your thoughts on this topic. It's true that the profitability of passenger trains can be a contentious issue, and there are certainly many factors to consider when evaluating the financial viability of a rail service. While it's possible that some companies may use the "Passenger Trains Lose Money" mantra as a negotiating tactic, it's also possible that there are real challenges associated with operating passenger trains, such as higher insurance costs and lower ticket prices compared to freight service.

As for Brightline, it's difficult to say for certain whether or not the service is profitable, as the company has not released detailed financial information. However, it's worth noting that Brightline has pursued a number of revenue streams beyond just ticket sales, including real estate development and advertising partnerships, which could potentially help offset operating costs. Ultimately, the success of any passenger rail service depends on a wide range of factors, including ridership levels, pricing strategies, and operational efficiency. Thank you again for sharing your insights on this complex issue.

I would assume that their goal is to make money. So, given reasonable load factors and pricing power based on road congestion and speeds exceeding comparable highways, and expected continued growth in Florida, they may succeed! But high inflation and interest rates and the inevitable recession to follow may derail their plans...

Brightline claims
- They made an operating profit in March
- They carried 170,000 passengers (vs 70,000 last year)
- They never intended to make a profit on the "south" segment alone


Maybe the influx of people (and traffic) to Miami has given them the oomph needed to near their original projections.

Gilbert B Norman wrote: ↑Thu Jul 25, 2019 12:44 pm https://www.palmbeachpost.com/news/2019 ... d-revenues
Fair Use:

..Virgin Trains launched last year amid fanfare and criticism, and ridership and revenue have lagged the company’s projections. Through the first half of 2019, Virgin Trains reported ridership of 481,320 and revenue of $11 million. In a document issued to bond investors in late 2017, Virgin Trains predicted its 2019 ridership in South Florida would top 2.3 million, while revenue would eclipse $112 million.

Critics point to the numbers as proof that the for-profit rail service isn’t viable. Indian River County Attorney Dylan Reingold, who opposes Virgin Trains’ plan to travel through Vero Beach on the way to Orlando, says the additional stops will put Virgin Trains in direct competition with Tri-Rail, the government-funded commuter service.

“The ridership and revenue for Virgin Trains has hit a wall only 18 months after beginning operations,” Reingold said. “Instead of continuing its predicted ramp up, Virgin Trains has plateaued well below its lofty projections.”

To reach its 2019 projection of 2.3 million riders, Virgin Trains would need to carry an average of nearly 200,000 passengers a month. The service has yet to break the 100,000 mark.

And to achieve $112 million in annual revenue, the former Brightline would need to bring in an average of more than $9 million a month. Its best month so far is $2.3 million.
..

https://www.thenextmiami.com/demand-for ... -intended/

So this would be EBITDA, Earnings Before Interest, Tax, Depreciation and Amortization. So things like debt service, wear and tear, and all that don't count.

Demand For Brightline So High That It Just Earned A South Segment Profit: ‘Never Really Intended’

Brightline’s trains are in such high demand that the company’s South Segment was profitable on an operating basis for the first time ever last month, according to the company’s chairman.

“We never really intended to make money on that segment on a standalone basis,” Brightline chairman Wes Edens told CNBC.

“A year ago we did about 70,000 rides in March, this year we did about 170,000,” Edens said.
...

Sounds like Miami-Orlando will be a blockbuster then. If people are already flocking to the glorified city rail service that Brightline currently has, they are obviously doing something right

Who knows if they will recapture their capital expenditures for track work and lovely stations and level boarding platforms, but this is great news. Makes one wonder if there will be any short haul trips MIA-WPB once Orlando service opens to make sure there are some seats left for the "3 hour tours".

IIRC they will still run just the southern portion as well.

EBIDTA is essentially "Cookie Jar Accounting", i.e. more was put into the till than was taken out. This was a term I often used with my clients.

Note that the "I" within the acronym stands for Interest, so no provision has been made for payment on the "bonds" which reportedly carry an 8% coupon rate.

But I'm glad to be mistaken "one more time" regarding Brightline, for as a paying passenger who uses such when "down below" (my Father's term when at their Lighthouse Point "outpost") for reasons other than joyrides, has found it to be a "heads up operation".

Well, debt service will have to come sooner or later; bonds always have a maturity date, and interest requires requires cash flow to pay. I've always told my students in veteran entrepreneurship training that their most important financial statement is Cash Flows. The bonds can always be refinanced, negotiated, reissued, but if you have an excessive cash burn rate you're eventually going to end up "dead in the water". If you're generating positive cash flow including interest payments, your debt holders will want you to stay in business so they can recover some of their capital at least.

What are the riser ships for Tri Rail? Is it down or staying the same? That figure would mean a lot!