Toll Road Firms Continue to Lose Millions

The Newspaper
by The Newspaper
toll road firms continue to lose millions

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.

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2 of 17 comments
  • 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.

  • Bd2 The hybrid powertrain in the Sportage and Tucson are the ones to get.H/K should discontinue the base NA 2.5L powertrain and just build more of the hybrid.In the future, maybe offer a 2nd, more powerful hybrid (the hybrid 2.5) which will first arrive with the next Telluride/Palisade.Kia also needs to redo the front fascia for the Sportage's refresh.
  • The Oracle I say let the clunkers stay on the roads.
  • Jpolicke Twenty-three grand for a basket case? And it has '66 wheel covers and gas cap so who knows what else isn't original?
  • Scott Can't be a real 1965 Stang as all of those are nothing but a pile of rust that MIGHT be car shaped by now.
  • 56m65711446 So, the engineers/designers that brought us the Pinto are still working at Ford!