Ritchies Transport

Timaru bus drivers are planning to strike for a week, effectively putting buses off the road.

The action involves about 10 drivers and comes after attempts to gain an increase in the minimum pay rate they receive, Amalgamated Workers Union spokesman Lindsay Chappell said yesterday.

The strike will run for seven days from Monday, July 21, and comes as a result of their employer's -- Timaru Bus Service Ltd -- "continued disregard for realistic wage rates," Mr Chappell said. "Our members regret it has come to this as they have the greatest respect and regard for the community who have been very supportive through the dispute."

It is illegal for the operator to attempt to use other drivers during the strike period.

While the drivers felt a responsibility to the community, Mr Chappell said they could not continue to work for the $12 an hour they receive or the $13 the company was now offering. There was also the issue of drivers not being paid for extra time when they finished a run late due to traffic delays or roadworks.

Their Christchurch counterparts, who have the same employer, are paid $16.85 an hour and $17.05 an hour after two years. The Timaru wages are the lowest rate paid by any South Island passenger service.

The drivers received $2 an hour more when employed by the service's previous contractor, Ritchies Transport. Mr Chappell said the drivers have been attempting to negotiate better wages and conditions since the company won the contract 18 months ago.

"Ecan chose the successful tender and, on this occasion, the lowest price, which clearly was based on the minimum wage for labour. "This is what the system is allowing and we ask what Ecan is doing with the savings made by the comparative pricing procedures.

"The public are paying for this service in their rates and you can guarantee there has been no rebate as a result of this tender process," Mr Chappell said.

Tourism Holdings is back on track with its strategy to streamline its business after announcing a joint venture with national coach company InterCity Group. About 30 jobs will be lost as a result of the deal.

The tourism operator, which owns well-known brands including Kelly Tarlton's Underwater World, Maui campervans and the Waitomo Caves will own a 49 per cent share in the new company - which will be called InterCity Holdings. InterCity will own the remaining 51 per cent.

Under the deal, Tourism Holdings' Fullers Bay of Islands and Great Sights divisions shift into the new company which will also include the InterCity Coachlines, Newmans Coach Lines and Kings Dolphin Cruises and Tours brands under the InterCity Holdings name.

The consolidation is expected to be completed by June. Staff from the Fullers Bay of Islands and Great Sights businesses will transfer to the InterCity Group but about 30 people will be made redundant. InterCity Group chief executive Malcolm Johns will head the new company and the board will comprise a further two directors from each of the companies.

Tourism Holdings chief executive Trevor Hall said he had been in talks with InterCity since before the failed MFS takeover bid but it had been put on hold during the process. "Malcolm and I had spoken about this previously but had not gone very far. But once MFS was done we got down to business."

Tourism Holdings would also receive $16 million in cash once the rationalisation is complete. Hall said this would be used to reduce its debt levels from a forecast $90 million to around $75 million by June next year. "We see significant returns out of InterCity - we are looking for growth and dividends."

InterCity chief Malcolm Johns said it was a big job to get Northland on the tourism map as currently only one in five tourists head north of Auckland. "We want to make the Bay of Islands to Northland what Fiordland is to Queenstown."

First NZ Capital analyst Jason Familton said the joint venture was a positive move for Tourism Holdings as it would allow the company to free up capital while still having exposure to the coach and ferry business. Shares in Tourism Holdings were unchanged at $2.30 yesterday.

Ends

Note by JH: Parent company of Intercity Holdings Ltd is RST 2007 Ltd, which is owned 46.37% by Ritches Transport Holdings, 46.37% by Transit Group and 7.26% by Nelson Intercity Ltd

TOURISM Holdings is going into a joint venture with coach operator InterCity Group as it looks to drive further rationalisation in the tourism sector and reduce its costs.

THL said yesterday that it would be selling its Fullers Bay of Islands leisure cruising business and Great Sights coach tour operation to InterCity. The deal, effective on December 1, will see THL gain a 49 per cent shareholding in InterCity and take out $16 million in cash.

THL chief executive Trevor Hall said the new combined InterCity company would be "a significantly more profitable vehicle than either of us operating individually. We are talking in the multimillions (of dollars)."

In conjunction with the deal, THL is also restructuring its internal operations, which will include duplication of services that occurs at the moment in some areas such as reservations. This will see job numbers reduced by 30 by next April. Mr Hall said he was confident the staff would be able to be placed in other jobs both within THL and in other tourism- related businesses.

InterCity operates the country's largest coach transport network, connecting to more than 600 destinations and with over 150 services a day. It also owns the Kings cruise and tour business in the far North.

InterCity is controlled by Masterton's Tranzit Group and Timaru's Ritchies Transport. Tranzit is owned by the Snelgrove family and Ritchies by the Ritchie family. Nelson bus operator SBL also has a small stake in InterCity. The current shareholders will collectively own 51 per cent of the new InterCity Group. The new company will have an enterprise value of about $70 million.

Current chief executive Malcolm Johns will continue to manage the business.

Forsyth Barr head of research Rob Mercer said the deal was an excellent outcome for THL. "This transaction again highlights the upside potential from divesting/merging (THL's) leisure group operations," he said. "THL gains the benefit of maintaining a financial interest in the operations while at the same time releasing some of the capital -- $16 million -- tied into this underperforming part of its group assets."

Tourism Holdings is involved in a broad range of tourism-related activities. It owns attractions such as the Waitomo Caves and Kelly Tarlton's and operates motorhome, campervan and rental car businesses.

The company has been looking to focus on the rentals business, the most profitable part of its operations. An attempt early this year to sell its tourism leisure group, which includes assets such as the Waitomo caves, led to a $277- million bid being made for the whole company by Australia's MFS Living & Leisure.

The bid narrowly failed to reach the required 90 per cent acceptance level, and lapsed in late July. Mr Hall and his team have looked for ways to streamline the business -- the company sold two thirds of its interest in Johnstons Coachlines. THL shares closed unchanged at $2.30.
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CAPTION: Bolting ahead: THL will pocket $16 million from the deal with InterCity.

Rival bus companies were not given the chance to bid for prized Wellington bus operator Mana Coach Services, which merchant bank Bancorp bought this week.

Christchurch-based Ritchies Transport, which also runs urban bus services in Auckland, said yesterday that it would have bid for Mana if it had been given the opportunity. "We would definitely be interested in that business and we always have been," director Andrew Ritchie said. "Certainly it is something we would look at in the future."

Buying Mana would have been the easiest way for Ritchies to enter the market, he said. "It is a good business and it has been well run in the past."

Bancorp bought 74 per cent of Mana from the Waddell family for an estimated $24 million. The other 26 per cent is held by Wellington investment firm Infratil, which also owns the Stagecoach buses. Infratil's attempt to buy all of Mana was rejected by the High Court this month after the Commerce Commission opposed the deal as being anti-competitive. Infratil is appealing against the decision and if successful said it would try to buy Mana again, using its first right of refusal.

Family member Ian Waddell said Bancorp managing director Craig Brownie had made a direct approach to buy the company.

Mr Ritchie said Mana's value would diminish if Bancorp tried to sell its stake to any company other than Infratil. He questioned the price Bancorp paid given that $24 million would buy a fleet of 90 new buses.

Ritchies had considered setting up in Wellington, as it had done successfully in other cities. "Something like this possibly makes us feel like we should be considering it in a little bit more detail."

The Commerce Commission is comfortable with the sale as it "preserves the potential for competition".

Mana Coach Services is being eyed by at least four transport operators, including three from Australia, keen to enter the Wellington bus market.

The High Court at Wellington stopped New Zealand Bus, which owns Stagecoach in New Zealand, from buying Mana last month because the deal would substantially lessen competition. Mana and New Zealand Bus had not competed for contracts in each other's patch.

Mana's owners, mainly associated with the Waddell family, told the court they would sell the company to another operator if the acquisition by New Zealand Bus was barred.

Mana operates a fleet of about 110 buses, including urban, and touring and charter buses. Stagecoach Wellington has about 370 buses under several brands.

Three Australian companies gave evidence during a two-week trial --Transdev-TSL, Veolia Transport and Swan Transit. All said they would look to enter the market by acquiring an existing operator. Bidding for individual contracts was too risky because of the small size of the contracts, and the lack of information about passenger numbers, revenue, costs, depot locations, and staff availability.

The director of Christchurch-based Ritchies Transport, Andrew Ritchie, told the court that the company had been in the Wellington market for a long time. However, the contracts for subsidised bus services, typically for between 10 and 15 buses, were too small to come in as a new operator.

Ritchies is New Zealand's largest privately owned bus operator, with a fleet of more than 600 buses. It operates urban bus services in Auckland, Timaru and Marlborough. It also has charter, tour and long distance services, including the Intercity brand. Mr Ritchie said Ritchies would not necessarily compete with New Zealand Bus if it bought Mana.

Transdev-TSL executive general manager, Ross Mackiggan said that, if it bought Mana, its strategy would be to compete with New Zealand Bus and take market share. French-owned Transdev operates trams in Melbourne, buses in Sydney and ferries in Brisbane. It unsuccessfully tendered to form a joint venture with the regional council to buy Wellington's urban rail service from Tranz Rail in 2002.

Veolia Transport director Peter Lodge told the court that it would look to buy an existing operation with about 150 buses to enter the New Zealand market. Mr Lodge said the New Zealand market was characterised by high entry barriers, but those became an advantage once the company was established. Veolia was Australia's largest private transport operator, including buses and trains in Australia's main centres.

It also operates the Auckland rail services in partnership with the Auckland Regional Transport Authority.

Swan Transit director Neil Smith said his company was interested in the New Zealand market, but it would require a contract substantially larger than the maximum existing contract size of 22 buses in Wellington. Swan Transit operates 283 buses in Perth, 560 buses in South Australia and ferries in Brisbane.

Auckland's gruelling bus dispute is unlikely to go anywhere this week, even though both sides say they hope to return to mediation to head off any more strikes next month.

Stagecoach says it is ready to meet union negotiators before a mediator at any time, while continuing to insist it has no more money to offer drivers after their six-day strike, which ended last Tuesday. But it acknowledges a meeting is unlikely during a week-long absence overseas of combined unions advocate Gary Froggatt, although drivers say their negotiators could respond to any approaches in the meantime.

The company has also re-submitted an application to the Employment Relations Authority for it to make the first binding pay ruling under new industrial law, on the basis of an alleged "serious and sustained" breach of good faith by union negotiators, which they deny. A hearing will begin on June 14 unless a settlement is reached first.

Stagecoach executive chairman Ross Martin says the company is prepared to give mediation another chance, despite 750 drivers voting on Wednesday by more than 13 to 1 to reject a new pay offer - one that even some union negotiators thought might have been acceptable.

The drivers held to their claim for an immediate pay rise to $16 an hour, and added a surprise demand for $17 in November, although they decided to refrain from any more industrial action until early next month. They held a stopwork meeting after Stagecoach doubled to $1200 a previous offer of cash in lieu of six months' backpay, but refused to lift the first instalment of a three-year wage regime above $15.

The only new movement from previous offers was of 7c an hour to $15.40 from November next year, and drivers were furious at being asked to wait until mid-2007 for $16.

But despite the drivers' added claim and militant mood, Mr Froggatt has since indicated they might settle for $16 if the company offers that before a deadline of June 7 set by the stopwork meeting, after which there could be more strikes.

He acknowledged that a lower settlement for drivers at Stagecoach's main Auckland rival, Ritchies Transport, could undermine the claim to some extent but said unions would keep pushing the larger company to set the benchmark for the rest of the industry. National Distribution Union organiser Karl Andersen confirmed the Ritchies deal at $14.05 an hour without overtime rates this year, rising to $14.60 next year. This compares with $13.20 previously paid to Ritchies drivers, and $13.94 received now by their Stagecoach counterparts, who also earn penal rates for overtime.

Mr Martin said Stagecoach had put "huge dollars on the table, and way more than Ritchies, and they are our major competitor in Auckland".

Ritchies director Andrew Ritchie said he did not want to be drawn into Stagecoach's dispute. What he paid his staff was nobody else's business. He said his company offered them greater flexibility to work more hours and hence earn more than Stagecoach drivers, and he believed a lower staff turnover indicated a happier workforce.

The Council of Trade Unions has meanwhile come out in support of the Stagecoach drivers' pay claim, after a vote last week of its affiliates council representing more than 300,000 union members. President Ross Wilson said he had offered to take a support role in the drivers' negotiations, was in contact with Mr Froggatt in Australia, and had already spoken to Mr Martin.

Hourly wages
* Waiheke Buses: $14.92 - due to rise to $15.37 in July. No extra overtime rate.
* Birkenhead Transport: $14.68 (average after including industry allowance) - due for renegotiation soon. Extra overtime rate.
* Howick and Eastern: $14.17 - due for renegotiation soon. Overtime extra.
* Urban Express: $14.05. No overtime rate.
* Ritchie Transport: $14.05 - to rise to $14.60 next year. No overtime rate.
* Stagecoach: $13.94 - has offered $15 now, $15.40 late next year, $16 in 2007. Overtime extra.