Infratil's NZ Bus wins $14.8 mln Bay of Plenty contracts

Monday 9th April 2018

Infratil-owned NZ Bus will displace four other operators after a successful bid for new contracts in Bay of Plenty worth an annual $14.8 million, having lost ground in its mainstay markets of Auckland and Wellington.

NZ Bus will operate the new and improved network once the current contracts held by Go Bus, Reesby Rotorua Ltd, Bethlehem Coachlines and Uzabus expire in December this year, the Bay of Plenty Regional Council said in a statement.

The new contract is more expensive than council's existing $12.8 million deal, but will include redesigned routes, new interchanges, extended operating hours and more frequent services with a fleet of low-emission vehicles including five state-of-the-art electric buses. Among other things, there will be 50 percent more buses running on most services and express services to growth areas.

The tender process was highly competitive for the nine-year contract that will enhance public transport in Tauranga by building on the great work undertaken by Go Bus and other contractors, said Regional Council public transport committee chair Lyall Thurston.

"Ultimately NZ Bus presented the best combination of price and quality for Tauranga ratepayers. The procurement team were particularly taken with the increased driver pay offered by NZ Bus,” he said.

NZ Bus lost most of its contract with Greater Wellington Regional Council last year to Masterton-based Tranzit Group, which the local authority said offer a cheaper service. Smaller contracts in Auckland and Wellington have meant NZ Bus signalled plans to shrink the business by about a quarter, and in February Infratil said it hired UBS New Zealand to help review its ownership of the unit.

From 2019, NZ Bus will own and operate a fleet of over 700 buses from 12 depots and employ approximately 1,400 people. The business is underpinned by long-term contracts averaging eight years in Auckland, 11 years in Wellington and nine years in Tauranga.

NZ Bus generated earnings before interest, tax, depreciation and amortisation of $43.7 million on revenue of $222.4 million in the March 2017 year. Since losing contracts, the business a 28 percent decline in first-half earnings to $17.9 million.

The Bay of Plenty public transport contract is funded from fares from passengers using the service, by the NZ Transport Agency through the National Land Transport Fund, and from council through rates.

Infratil shares slipped 0.3 percent to $3.10 and have dropped 6.3 percent so far this year.

(BusinessDesk)

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