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.