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KiwiRail counts the cost of the quake

NZ Newswire logoNZ Newswire 25/02/2017

At the end of October KiwiRail was anticipating a record summer season for both freight and passenger businesses before the 7.8 Kaikoura earthquake in November wrecked its upper South Island network.

On Friday chief executive Peter Reidy noted this as he unveiled a $23 million profit for the six months to December 31, 2016.

The surplus falls to $11m when a $9m loss of revenue due to the quake and $3m of costs are included.

The business already had $48m less revenue from the loss of the Wellington Metro train services contract and bulk milk freight was lower.

Domestic freight took the biggest hit from the earthquake, due to the closure of the Main North Line (MNL), Mr Reidy says.

KiwiRail's scenic journeys unit is down $1m due to the forced cancellation of the Coastal Pacific scenic passenger train. The TranzAlpine service through the Southern Alps was also disrupted when the Midland Line closed during February when a scrub fire ravaged the line.

As a state-owned enterprise, KiwiRail strives to make a profit but it needs government support for capital investment after a period of under-investment in private ownership.

In Budget 2015, the government announced a two-year funding package to invest in the rail system, with $210m in FY16 and $190m in FY17.

Mr Reidy said the government's early commitment to the rebuilding of the MNL after the Kaikoura quake has meant that work began at pace, with the first section to Lake Grassmere opened in mid-January, designs for six new bridges nearing completion and crews working south from Blenheim and north from Christchurch to get the line open.

"There is no doubt the organisation has challenges ahead this year but events like the Kaikoura earthquake will only have a short term impact if we continue our focus on reliability and productivity for our customers," Mr Reidy says.

"That is ultimately what will drive KiwiRail's transformation into a commercially focused organisation helping to grow New Zealand," he says.

Mr Reidy says the organisation worked quickly in the aftermath of the earthquake to open the Blenheim Freight Hub, initiate the NZ Connect coastal shipping service from Auckland to Lyttelton and boost rail services to inland hubs in the North Island.

"Throughout an eventful six month period, the safety of our staff, contractors and the public has remained paramount," he said.

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