Possum
No one expected IFT to enter into the bus business. However, Morrison & Co had experience in this area so backed themselves to make it work. It has been a tough road so far as the local and central govt influence has been difficult to digest. Having said that, progress has been made and the business is building. IFT added to the bus business as recently as January 08.
The public transport model is an interesting one and all of the right noises are being made to reduce green house emmissions and put more bums on seats.
I think that IFT can grow this business but if you are looking for large p&l figures then you will only be dissapointed. Its not politically correct to disclose large profits from providing public services. The benefits from owning such a business come from the large and consistent stream of cashflows which you then use to run and build other parts of your business where you can disclose larger bottom lines.
I do agree however that the rewards so far do not match the enormous effort and resources that IFT management have contributed to building this business for the benefit of themselves and the NZ Public . You can rest assure that every lesson learnt from Morrisons team will be taken on board to deliver a better performance in the future as the Govt grows the public transport model.
For the record, I do not think that the bus business has anything to do with the current softness in the SP. There are a number of factors contributing, some of which are, current market risk (softness in global markets), lower spot electricity prices for the first nine months of the year (which has now corrected itself), Australian energy business (opposite problem, spot prices were too high during the first six months but have come down during the last quarter), questions around the European airport business (The Prestwick landing fees vs new terminal debate for example. Kent is a long term hold and will work out well, Lubeck, who cares as IFT have an out option if their plans cannot progress), questions over where the AIA holding is heading, the current strength of the NZ dollar, what is the cash from the latest capital raising going to be used for etc etc
I'm picking that the IFT ducks will all line up again before the end of the year is out but one does lose a little sleep in these uncertain times. Hopefully the quarterly report with be a little more informative than usual to quantify a few of the perceived and real risks to the IFT shareholders.