407 reports rise in costs

407 International reported revenues in the first half of the year at $112m in annual terms, up on $95m/yr for 1999. But costs of operations rose more – from an annual $34m to $60m so the operating profit declined from $61m to $52m. The private owners who took over the facility in the spring of 1999 have been highly critical of the design of customer service and account systems inherited from the province and have been spending heavily on upgrades. They have made large increases in staff and are expanding their main building. The toll management systems are being substantially upgraded.

Financing and other capital costs were put at $120m this year compared to $94m in 1999 producing a net loss of $72m – just about double the level of 1999. (All C$s converted to $s at 67c and prorated to annual rates.)

The group says its financial results are in line with its business plan. It has now completed a complete refinancing of its debt.

407 Int reported 38m trips on the 69km toll road known as 407-ETR in the first half of the year, an average daily 208k, which they say is up 15% on the first half of 1999. A one-day record for trips of 303k was reported for June 3. Transponders on issue numbered 378k mid-year compared to 299k mid-1999.

The company increased peak tolls 5% May 1 to 7c/km (11c/mi), and eliminated the off-peak weekday discount rate, effectively raising those tolls 33%. The night toll went up 25% to 3.3c/km (5.5c/mi) and the premium for video-tolling rose 50% from 67c to $1/trip. The higher charges will only have benefited revenues for the latter third of the period, so the full year effects should boost 2nd half revenues. (Single unit trucks are twice and articulated vehicles thrice the car tolls quoted.)

The company has under construction major extensions eastward and westward, and interchange improvements to 407-Central under construction. The western extension of 24km to Hamilton will help profitability but the eastern extension of 15km is not considered likely to be profitable for the forseeable future. Eight interchanges will be added or improved with extra movements.

407 International Inc. is owned by a consortium comprising large Spanish-based tollster Cintra (Concesiones de Infraestructuras de Transporte), SNC-Lavalin a Canadian engineering and construction company, and Capital d’Amérique CDPQ, a subsidiary of the Caisse de dépot et placement du Québec.

Planning is in train for the first widenings.