Brightline Trains Florida discussion

[jis]

In this case, I think you have at least some bridges, etc. that need engineering work done.  Ideally it would be a bit quicker for obvious reasons, but given that this is a fresh ROW it doesn't seem horridly unreasonable...and if nothing else, we can hope that this isn't an over-promised timetable.

Two significant river crossings(St. Johns and Econlockhatchee Rivers) and one significant causeway across wetlands (St. Johns River Swampland) plus several flyovers and duck unders at various cross roads. Also built in general on mush half of the way even where it is not on viaducts. It takes the foundation formation to settle down and stabilize.

Someone posted a photo of stacks of concrete ties that have been warehoused near the branching point at Cocoa for use on the new track, both along SR 528 and the new (restored) second track along FECR I suppose.

 

[Brian_tampa]

Found a document online today that spells out the amount of money Virgin is investing in Brightline: $30-50 million. If this reflects the 3% figure that was reported previously, then Brightline appears to be valued at anywhere from $1-1.7Billion. I am surprised that Brightline is giving up their brand and allowing 1 of the 4 board of directors for the new company to be picked by Virgin for such a small amount of cash. Of course, Sir Branson is using what appears to be a shell company (Corvina Holdings) located in the British Virgin Islands to escape paying proper taxes. I understand he is known for this sort of stuff in the UK, so it's not unexpected.

https://www.sec.gov/Archives/edgar/data/1737516/000114036118045655/s002218x8_ex10-73.htm

View attachment SEC_Document.docx

 

[Bob Dylan]

MAGA using "Dark Money"! <_< :help:

 

[Brian_tampa]

More news about airlines (probably mostly international) interested in adding flights into MCO because of Brightline having a station at the airport. I know many people disagreed with the decision to have the main Orlando station at the airport. With this news, it might end up being a very good choice in the end. Especially if they have a station adjacent to Sunrail at the Meadow Woods station to allow more connections for local passengers.

Here is the relevant portion of the Orlando Business Journal article linked below:

https://www.bizjournals.com/orlando/news/2018/12/24/how-orlando-international-airport-expects-to-tap.html

And it's Brightline that's been one of the X-factors the airport has been tapping into to keep conversations energized with potential future new destinations and carriers, said airport executives.

"Airlines are looking for the connectivity and where they can get more from a market. That's why airlines see Brightline and consider bringing more planes into Orlando," Vicki Jaramillo, senior director of marketing and air service development at the airport, told Orlando Business Journal.

"There's great interest in Brightline for Orlando. It would help in getting someone who flies in from Saudi Arabia to Palm Beach simpler. So we continue to push that because it's what the airlines want to do in the future," she added.

 

[jis]

And Orlando International is already the largest airport in Florida now having beaten Miami International last year. And this is even before the first phase of Terminal C is built. OTOH Miami International has nowhere to expand.

The decision to build a station at Orlando International is the right one given the clientele they are after. Before you know it, Brightline WPB, Fort Lauderdale and MiamiCentral will get their own IATA codes. [emoji57]

 

[Anderson]

Oh, I assumed that would happen.  I've mentioned to a friend that I would be shocked if several airlines (particularly JetBlue) weren't looking at codeshare possibilities, particularly if they could get a station at FLL since it would give them room to "add" Palm Beach and Miami without having to add flights into those destinations (particularly MIA, which IIRC has been "crowded" for about half a century).

 

[me_little_me]

I've always been a believer in eliminating short-hop flights as they take up half the landing and gate slots at major airports and contribute to major delays. All major airports (ATL, Charlotte, are you listening?) should have rail service to nearby cities with 100mph rail.

 

[chrsjrcj]

There were a couple flights between this year and next that I booked where I seriously considered using MCO (because it was a nonstop flight, or not a redeye) but ultimately stuck with PBI, mainly because I didn't want to have to do the 2.5 hour drive plus pay for parking. Brightline will definitely be beneficial in this regard, especially when it comes to transcontinental and international flights (JetBlue and Amtrak do a fine job moving me up and down the Eastern seaboard). 

 

[user 1215]

Just tossed Indian River lawsuit:

https://www.tcpalm.com/story/news/local/shaping-our-future/growth/2018/12/25/indian-river-lawsuit-dismissed/2411193002/

 

[jis]

Just tossed Indian River lawsuit: https://www.tcpalm.com/story/news/local/shaping-our-future/growth/2018/12/25/indian-river-lawsuit-dismissed/2411193002/

The other related thing that happened this week is that Elaine Chou ignored a fervent appeal from Reps. Mast ® and Posey ® to deny extension of the deadline for selling Private Activity Bonds, and approved an extension to June 2019.As long as people like Senator Scott (R-Florida) have a personal financial interest in the Brightline project, these lesser retrogressive Republicans on the shore have no hope of succeeding.

At one point Rubio was occasionally making anti-Brightline noises, but of late he has thankfully gone eerily silent. Maybe FECI sold his "blind" trust a chunk of indirect interest in Brightline related real estate. Juuust kidding. But then again, that is how things are mostly done in Florida, since the hoary days of Flagler. Back then there were FEC instigated Grifters who went about selling swampland by the Gallon instead of Acre as some joked. [emoji37]

Afterall, Martin County got approval to form a separate county from Governor Martin by promising him that the County will be called Martin County. [emoji1]

 

[Thirdrail7]

It would be nice to see a through ticketing agreement between the airlines and Brightline.

 

[Brian_tampa]

Q3 results out this afternoon. 159k riders and $2.9M revenue. Not much unexpected news with this.

View attachment ES1224794-ES956449-ES1357440.pdf

 

[Anderson]

No real surprises in there.  EBITDA ("Everything Before I Tricked the Dumb Auditor") losses are sitting around $14m/quarter at this point, putting direct cost recovery somewhere around 17.5%.  This is actually an improvement (last quarter was around 10%).  The operating losses are closing...just not as quickly as is needed (the loss in Q3 is $2.4m less than in Q2).

Direct ticket revenue is averaging $14.39/passenger for the quarter (total revenue averages $18.36/passenger).  Of note, this means that neither interpretation over in the other thread (when trying to tease out revenue numbers) was correct.  Table time!

      Ridership    Ticket Revenue    PPR    Ancillary Revenue
18Q1     74,780   $  664,000    $ 8.80    $  104,000 ($1.39)
18Q2    106,090   $1,143,000    $10.77    $  392,000 ($3.69)
18Q3    159,586   $2,296,000    $14.39    $  634,000 ($3.97)
===== ===== ===== ===== ===== ===== ===== ===== =====
18Q4-A  200,000   $3,000,000    $15.00    $  800,000 ($4.00)
18Q4-B  220,000   $3,630,000    $16.50    $  880,000 ($4.00)
18Q4-C  220,000   $3,960,000    $18.00    $  880,000 ($4.00)
18Q4-D  220,000   $4,290,000    $19.50    $  880,000 ($4.00)
18Q4-E  240,000   $4,320,000    $18.00    $  960,000 ($4.00)
18Q4-F  240,000   $4,800,000    $20.00    $  960,000 ($4.00)

Projection A presumes that December "returns to form" and that November was a deviation with its ridership growth.  It also makes a low estimate on PPR (barely above Q3).

Projection B presumes that December follows in the footsteps of November and presumes an additional 10% increase in PPR.  C and D use additional bumps in PPR of 20% and 30%.

Projections E and F presume that ridership in December grows again.  They also post PPR growth (20% and about 35%, respectively).

My personal guess is D.  Christmas is going to play hell with the timetables but the Polar Express trains are going to help offset that with a solid slug of "premium" revenue.  I'm hard-pressed to see them adding another 20k pax month-over-month in that context.

Actual Ticket Revenue vs Estimates
      Actual   Est.   %
Q1    $0.66m  $5.98m  11.05%
Q2    $1.14m  $5.98m  19.06%
Q3    $2.29m  $5.98m  38.29%
Q4-Low$3.00m  $5.98m  50.17%
Q4-Hi $4.80m  $5.98m  80.27%

(The tables and analysis are going in the other thread as well)

 

[jis]

How do we know how quickly the operating losses need to close? Have we seen any trustworthy statement about their planned flight path on that?

 

[Brian_tampa]

IIRC, AAF/Brightline documents from several years ago referred to a 3 year ramp up once Orlando was operational before they would be profitable. But because their plans have been scrambled due to delays, it appears that would place the final date to meet their revenue goals somewhere around 2024-25 assuming Orlando opens in 2021-22. Until Orlando is open, the currently reported numbers really are not meaningful when comparing to what is needed to be profitable. Running MIA to WPB was never expected to make a profit while they are building out, based on what I recall reading. There are several years of anticipated high losses built into their business plan.

I will try to locate the appropriate document that states this. It may have been restated in the recent IPO filing document as well, but I am sure it was part of the PAB documents that I obtained from the FDFC back in 2015. I also have documents from FDOT for both the Beachline lease and the recent I4 proposal that cover their financial plans.

 

[jis]

That is consistent with my recollection. That would imply that it is almost impossible to decide whether they are on track or not at this point in time. That was my obliquely expressed point.

 

[Brian_tampa]

See page 7 of the attached SEC document for the IPO from last month. It mentions a 2 year ramp up time before they meet their expected revenue targets after build out. Late 2023 or early 2024. The pdf can be word searched to make it easier.

View attachment virgin trains usa sec-1 form 111618-1.pdf

 

[Anderson]

The percentage data I was expressing, for the record, is as a share of projected 2018 revenue (divided over the four quarters).  There's a case to be made that they're simply pacing 6-9 months behind their projected trend.

The biggest issue, from what I can tell, is their "burn rate" (i.e. how fast they're running through cash versus the existing cash stockpile).  That's the biggest worry insofar as this goes is more the accumulated losses in the interim and the risk that all of this outpaces their budgeted amounts by a significant amount.

I think the second question/worry is whether or not they're going to be able to meet longer-term revenue projections within the southern portion of their system.  Right now they're sitting around 48,000 seats/week [1] of which they seem to be selling somewhere approaching (potentially passing) 20,000.  I know one big question is how much they can push revenue up, but either they're gonna need longer trains in service before they get to Orlando or they're going to ram into capacity issues if they can keep their ridership growing (especially since, as we all know, ridership isn't anywhere near 100% fungible).  I'm not prepared to expect that ridership will keep rising on the recent trendline, but I think quarter-over-quarter growth of somewhere in the range of 10% for the next year would be a reasonable "lowball" trendline to hope for.  I just can't see them not getting into a bottleneck pre-Orlando with "only" four-car trains (especially if they want to grow a reliable business/commuter base).

Interestingly, the Eurostar and Italo settled at about double their year three ridership.  The Acela fell short...but that has been very clearly a function of some combination of nosebleed pricing and hard capacity limits (Amtrak having clearly acknowledged the latter for over a decade).  Of course, Brightline is also complicated by the fact that while the Acela was basically Metroliner Take Two, Italo was also in a mature market, and the Eurostar was bookended with massive railway networks, there's almost nothing in Florida that's comparable (though at the rate things are going that is slowly changing).


[1] 240 seats/train (I know this is a little high) times 32 trains per weekday (7680 seats/weekday).  240 seats times 20 trains per weekend day (4800 trains per weekend day).  Five weekdays (38,400 seats) and two weekends (9,600 seats) gives 48,000 seats.

 

[Brian_tampa]

I found the 2017 PAB document, although I'm having problems uploading it here. A screenshot will have to suffice. Page 71 of the pdf file shows expected yearly fare revenue and ridership numbers based on full Miami to WPB service strating in Q1 of 2018. $32.6M revenue and 1.13M riders for 2018. Due to full service not starting until August, these will have to be prorated somehow. Not sure how to prorate this as they had a very different startup ramp than the ridership study assumed. Since the document only shows full year numbers, it would be very hard to interpolate that for the actual Q3 and Q4 numbers after full service started. Maybe one could assume Q1 2019 would be at 50% of the average for the estimated 2018 totals? This would be $16M annual revenue rate with 550k annual ridership rate. Individual predicted quarterly numbers seem to be impossible to determine since the actual numbers are increasing non-linearly during the ramp up period and we only have one reference number for the first 12 months of operation to compare with.

 

[Anderson]

My first thought on seeing the chart above?  "Well, that dog ain't gonna hunt..."

The chart indicates ridership that we're actually "on pace" for at this stage.  Yes, I realize that 80,000/month doesn't equal just shy of 1.2m...but ridership is still likely surging along and if we get over 100k/month we're there.  Ridership for the first 12 months of full operation might well reach those totals.

Revenue is a problem.  PPR for 2018 was pegged at $28.75.  Getting to $20 for Q4 relies on an aggressive set of assumptions, and getting to $28 requires nearly another 45% bump in PPR on top of that.  On the other hand, ancillary revenue is simply shot to hell compared to the numbers we've got (they're looking at $21.08/pax in 2018, falling off to $13.13/pax in 2019) and I have *no* idea what assumptions are at play there.  I'm guessing that there's some mix of rental income and Tri-Rail access fees.

The bigger problem is the ridership counts.  48,000 seats per week times 52 weeks gives 2,496,000 seats.  I realize there's room for some turnover (and a little bit of "fudge room" in my calculations), but the 2019 ridership projections (2.31m) would essentially fill every seat on every train.  2020 is substantially clear of that (2.94m), let alone allowing for a reasonable limit on load factors.  Given that ridership isn't totally fungible, that's a structural issue, and my understanding is that additional cars aren't in the pipeline until Orlando.

Of course, add two cars of Smart seating (as opposed to two Smart cars, which wouldn't be anywhere near enough;-)) to each train and you've probably got enough.  Presuming replicas of Car 3 (64 Smart seats, 2 wheelchair spaces), that does get them to a decent place (3,848,000 seats/slots on the same frequency presumptions above)...though I think that definitely requires going to nine-car sets (and/or seriously looking at extra peak-hour trains) for the Orlando extension.

Of course, I'm also looking at the numbers and wondering where the various cost/demand points are (especially if something like the proposed commuter service gets into the mix versus not getting in there).

Something interesting (and indeed I may be data-snooping to have seen this), but does anybody else notice the way the fuel costs "stair-step" in 2021, 2023, and 2025?  It's quite plausibly a modeling artifact, but I could just as easily see that being "we expect the trains to be lengthened in these years".  Notably, nothing else seems to "step" in the same way (though equipment maintenance has a *very* strange behavior...it basically goes flat for 2021-22 and then *drops* for 2023-24, only to pop back up in 2025.  The only explanation I can see is some sort of cost-sharing being anticipated with the Orlando extension (Tampa had no visible timetable until recently).  The other lines mostly track, but those two behave very oddly.

 

[Brian_tampa]

If Q3 fare revenue was $2.3M for the first quarter (actually less than 2/3 of a quarter) of full operation, then could one reasonably expect the second quarter of full operation to be somewhere north of $3-3.5M at the current rate of increase? That would be 75+% of the expected fare revenue after 6 months of full operation. And if we assume further non-linear growth in revenue, by the fourth quarter of full operation it should obtain similar percentages, i.e. about $6M (75% of the $8M expected revenue per quarter) fare revenue in the 4th quarter of full operation for April-June 2019. The question is whether this rate of growth is sustainable in order to reach their target after 3 years at $27M per quarter? I do understand there is an inflation factor of 2.8% in these predicted revenue numbers, so 3 years out does skew the numbers higher than what we see for actual 2016 dollar amounts, per the document. See attached screenshot for the notes related to the table I sent previously.

 

[Anderson]

Well, for Q4 we have reasonably hard numbers of $1.0m for October and $1.5m for November.  So December coming in around $1.5m (in line with November) would put Brightline at $4.0m.

 

[user 1215]

Back in the beginning when everything was under one FEC umbrella, was the internet for Brightline to be completely self sustaining or a loss leader to the real estate and business improvements?

Obviously they would want the railroad to make money, but it would have been conceivable that so long as the direct operating costs were covered by direct revenue, the infrastructure costs could be borne by the economic activity in and around the stations.

This would have been consistently with how JR and many 2nd tier Japanese railroads operate around Tokyo, but the FECI FECR split would have derailed that theory. 

 

[jis]

The real estate holdings along the ROW are managed by business units that are part of Brightline. The SEC filing shows that in a neat little diagram buried in there somewhere. Brightline is a Passenger Rail and Real Estate company.

Of course FECI does own vast amounts of other real estate that has nothing to do with Brightline too.

And all this has not much to do with "when it was under a single FEC umbrella". When they separated FECR from FECI they divvied up the real estate such that most of the real estate holdings along the RoW, except for the FECR RoW itself fell on the FECI side, and quite a bit of it was then transferred to AAF. So no, the FECI FECR split did not quite derail the theory. Actually it follows the theory very closely. FER is a rail infrastructure maintenance and train operating company. FDC (Florida Dispatching Company) is the train operations management company, and Brightline is the passenger rail operations and associated real estate company.

FECR is now owned by Grupo Mexico, FDC is equally owned by FECR and Brightline, and Brightline is owned by FECI, which is owned by Fortress, which is owned by SoftBank. So at the end of the day, it is a Japanese thing.

 

[user 1215]

Another pedestrian self-killed: https://www.sun-sentinel.com/local/broward/fort-lauderdale/fl-ne-brightline-accident-20190101-story.html

Likely a suicide.  Note: Certainly not caused by a quiet zone.  hboy: