Toll Road Firms Continue to Lose Millions

The Newspaper
by The Newspaper

Highly leveraged toll road firms continue to post multi-million dollar losses as drivers shun expensive routes during the economic downturn. This week, two Australian firms with significant US holding reported overall negative results for the year ended June 30, 2009. Transurban, which owns Pocahontas Parkway in Richmond and is building High Occupancy Toll lanes on the Capital Beltway in Virginia, lost A$16.1 million. Macquarie, which owns the Indiana Toll Road, the Dulles Greenway in Virginia and the Skyway in Chicago, Illinois, lost $1.7 billion.

As recently as July, Macquarie Infrastructure Group (MIG) acknowledged a $3.5 billion drop in the value of its assets since June 2008. Traffic on the company’s portfolio of roads also dropped an average of 3.4 percent.

“Over the year we have actively sought to offset the negative external factors impacting on the portfolio,” MIG Chief Executive Officer John Hughes said in a statement. “These have included revenue maximization and cost control initiatives at the road businesses.”

Revenue maximization refers to the significant toll hikes imposed on cash-strapped drivers. Even though, for example, traffic dropped 1.9 percent on the Chicago Skyway, increased fees passed on to motorists drove the road’s toll revenue up 11 percent.

Transurban has used the same toll raising technique to hold its loss to a minimum. Even though traffic on the Pocahontas was down 11.6 percent, increased costs for motorists kept the road in positive territory with 0.6 percent revenue growth. Transurban also made up losses by slashing the customer service and information technology budgets by $10.6 million.

“Transurban roads have been among the best performing toll roads globally in the past 12 months reflecting the quality of our urban toll road portfolio,” Transurban CEO Chris Lynch boasted in a statement.

Both Macquarie and Transurban reported that the most recent monthly traffic reports have shown signs that drivers may be returning to the toll roads. Each also predicted a prompt return to profitability.

The Newspaper
The Newspaper

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  • Don1967 Don1967 on Aug 29, 2009
    How does a for-profit business compete against a free alternative? College towns still have hookers and strip clubs. The difference is that even the dorkiest kid in a Daewoo can still get some road for free :)
  • Greg Locock Greg Locock on Aug 29, 2009

    Funny quote, but I track my performance against the all ords, thanks.

  • JOHN One is for sale on an ebay car donation site.
  • Scott So they are losing hundreds of millions of dollars and they are promising us a “Cheaper EV”? I wonder how that will look and feel? They killed the Fiesta because they claimed that they couldn’t make a profit on them and when I bought the first one in late 2010 they couldn’t deliver the accessories I wanted for it! Then I bought a 2016 Fiesta ST and again couldn’t get the accessories for it I wanted. They claimed that the components were going to be available, eventually. So they lost on that one as well! I don’t care about what they say anymore. I’ve moved on to another brand.
  • Michael S6 CX 70 or 90 will not be on my buying list. Drove a rental base CX 90 and it was noisy and the engine noise was not pleasant. Ride was rough for a family SUV. Mazda has to understand that what is good for Miata isn't what we expect in semi luxury SUV. My wife's 2012 Buick Enclave has much better Ride and noise level albeit at worse gas millage. Had difficulty pairing my phone with Apple CarPlay
  • Michael S6 What is the metric conversion between one million barrels and the number of votes he expects to buy.
  • NJRide This could give Infiniti dealers an extra product maybe make it a sub brand