August 28, 2012

KiwiRail aims to cut expenses by $NZ 200m

Written by  Richard Worrall
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IN an effort to boost its financial performance, KiwiRail has announced plans to cut $NZ 200m ($US 161.5m) from expenses between 2013 and 2015.

The railway has set an Ebitda target of $NZ 64.6m in 2013, and could cut 170-220 full time jobs in its network division to reduce staff costs by $NZ 18m. The railway will also defer indefinitely a planned $NZ 30m-a-year track renewal programme beyond 2015.

The cost-reduction strategy follows comments earlier this month from minister for state-owned enterprises, Mr Tony Ryall, who cast doubt over whether KiwiRail would be able to generate sufficient revenues to fund its share of a planned $NZ 4.5bn investment aimed at turning the railway into a profitable enterprise.

KiwiRail has struggled to achieve profitability in the wake of the global economic slowdown and the Christchurch earthquake, which has dampened inter-island freight demand. The government has only committed $NZ 750m towards the total cost of the plan.

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