Re: [Vic] Fast train services to go ahead, says Govt

[mauried@tpg.com.au (Maurie Daly)]

On Tue, 03 Oct 2000 22:04:18 +1000, Craig Haber
<albatross@harnessnet.com.au> wrote:

>Hi,
>
>Maurie Daly wrote:
>
>> On Tue, 3 Oct 2000 19:10:12 +1000, "Steve" <hursteau@yahoo.com> wrote:
>> Well what is the value of the trains?
>> The major value is in the loco fleet of which the best locos are the
>> Gs .
>> There are 33 Gs of average age 14 - 15 years.
>> Whats a G that old worth?
>
>Depends.  If it's ex-overhaul and hence has an economic life of
>1,000,000kms ahead of it, it's worth big bikkies.  If it's due for major
>overhaul and has no economic life, it's worth bugger all.  The age of the
>loco is IMHO irrelevant.  The important things are
>a) how much life in it till its next overhaul
>b) its ability to earn revenue


Lets have a look at this .
The value of a locomotive is 
1/ The value to its current owner.
2/ The value that you can sell it for if you dont need it .

NRC currently have 10 AN class sitting around rusting , ie they have
no earning potential whatsoever to NRC , but still have a high capital
value .

Likewise FAs Gs have a good earning potential  and may be worth $4 M 
but there is no way that FA could sell them for $4M to anyone ,given
that you can buy a brand new NR for $4 million.
If this were the case t would make good business sense for FA to sell
its entire fleet of Gs for $4 milion each ,invest the proceeds and use
the interest to lease locos like ELs ,or even contract with Clyde to
build a heap more 82s on a power by the hour deal.

In the case of WCRs locos, they may have good earning capability to
WCR,but if WCR tried to sell them to anyone else,they would get not
much more than scrap value for them.

In the case of what FA paid for Vline freight.
For an outlay of $164 M they would be entitled to expect a return
after tax on their investment of 18% (this is normal commecial
practice) ,which means an annual return on the investment of around 
$29 M after tax.
Given that before the sale ,Vline freight didnt make any profit at
all,its hard to see how the business can be worth that much.

In the case of buying the business to get into the interstate freight
market, ATN have been able to do just this without having to buy
anyone or shelling out anthing like what FA paid.


MD