Stagecoach (NZ)

Auckland bus passengers are assured of 2 years of industrial peace after drivers agreed yesterday to end a long and bitter pay dispute.

About 600 NZ Bus drivers and cleaners voted by an 80 per cent majority to accept a company offer amounting to a 20c hourly pay rise in three instalments. That will lift the top hourly rate for drivers with at least nine months service to $17.45 now, $18.15 next year and $18.75 in February 2012.

The deal includes a minimum of $560 in backpay dated from July 5 and a $500 contribution from the Auckland Regional Transport Authority to wages lost when NZ Bus locked out 875 workers and suspended all its services for seven days last month.

Although the pay rises are the same as offered in a package rejected by 55 per cent of drivers at a rowdy and emotional meeting three weeks ago, union negotiators welcoming a softening of "clawbacks" sought by Infratil subsidiary, which provides 70 per cent of Auckland bus services.

Auckland Tramways Union president Gary Froggatt said the company dropped its demand to be able to review the jobs of drivers absent because of incapacity for more than two months, and had reverted to an existing three-month threshold. It also agreed to add just 24 hours to an existing 48-hour time limit for submitting complaints to drivers, which was half of what it sought earlier.

The deal retains a new weight limit of 115kg for driver recruits but the unions say that is outside their control as a pre-employment requirement, even though Auckland University of Technology nutrition and obesity expert Professor Elaine Rush believes it will discriminate against Polynesians, with higher average weights than other ethnic groups.

Drivers spoken to outside a Tramways Union meeting at Alexandra Park were generally pleased to have settled up before Christmas, given the added financial strain the festive season puts on families, but one said he believed they should have held out for more money. He believed the length of an agreement locking drivers into what he still considered to be low wages would make the company an attractive sale proposition.

Mr Froggatt acknowledged a general suspicion that Infratil may be grooming NZ Bus for sale, but said that gave the drivers no great concern as they had lost confidence in the company. He said that although hourly pay rates were now higher than that of other Auckland bus company, NZ Bus drivers received just time and a quarter for overtime hours and were determined to fight for time and a half after the new agreement expired.

Company operations general manager Zane Fulljames said NZ Bus was confident it had secured an agreement that would meet the needs "of our customers, our people and the business" and looked forward to rebuilding long-term relations with the four bus unions is it reshaped its operation. "This agreement allows us the stability and certainty to move forward with confidence into the Rugby World Cup 2011 and beyond," he said.

Regional transport authority chief executive Fergus Gammie also welcomed the return of stability for bus passengers.

Infratil's decision to register four key bus services as commercial - which require no regional council subsidy - is being described by the Green Party as the actions of a "virtual monopoly" trying to undermine a new tender process.

But Infratil says it will save the Greater Wellington Regional Council (GWRC) $2.5 million a year, making it a win-win for passengers, ratepayers-taxpayers and its own operation.

Two of the services (Queensgate to Stokes Valley and Petone to Upper Hutt) are contracted services which means they attract a GWRC subsidy.

A third proposed commercial service replaces contracted weekend and night-time services between Wellington and Eastbourne. The fourth is a new route from Johnsonville via Khandallah to Victoria and Massey Universities.

Until now, GWRC has set contracts on a route-by-route basis. But a change to legislation introduced last year means that it is possible to bundle sets of public transport routes into a contract.

That's likely to cause competition among bidders, thus driving down the overall level of subsidy required.

GWRC is about to release contracts for bus routes in the Hutt Valley on this new basis. The contracts will be for eight years, with an option for renewal for a further four years, the long guaranteed period being another incentive for an operator to sharpen its price.

According to a GWRC report, there had been steady bus patronage growth up until 2006 but since then, user numbers have been static of declining, despite higher costs of using private cars, petrol, etc. Bus customer satisfaction levels have also slipped 5 per cent since 2003.

''Information on the operational performance of Wellington's bus services is generally acknowledged by all parties to be unsatisfactory,'' the report says.

Services are dominated by the ''big two'' Infratril's NZ Bus Ltd (Go Wellington, Valley Flyer) and Mana Coach Services account for 98 per cent of the market with NZ Bus being by far the bigger of the two.

A High Court finding from 2006 was that while there was genuine interest from other operators to bid for services in this region, current contracts were too small in size and too short in duration.

A nationwide benchmarking exercise found that contracts involving more than one bidder are 15-20 per cent lower than with a single bidder (97 per cent of Wellington's contracted services attract a single bid).

''While it would be simplistic to conclude that competition for all contracts would reduce prices to this extent, the information does indicate that competition would generate significant downward pressures on prices in Wellington,'' the GWRC's report says.

A switch from net to gross contracts, as the GWRC is now proposing in the Hutt Valley, could enable the council to make savings of up to $4m-$5m each year.

Greens former co-leader Jeanette Fitzsimons says Infratil's registration of the two Hutt Valley commercial services on the eve of introduction of the new system here is ''cherry picking'' of the plum routes.

''They've busted open the contract and made it much less likely there will be a competitive tender for the rest of it.''

While it might initially appear to be a saving for GWRC, with two services no longer needing any subsidy, she says the subsidy required for remaining services with those two prime, well-patronised routes out of the equation, ''are likely to be higher''.

NZ Bus CEO Bruce Emson says the company is making these registrations now ''because of a very narrow window of opportunity''.

''Uncertainly around the [Public Transport Management Act] and regulatory framework has made it difficult to contemplate registration of these services until now,'' he said.

It's regrettable the Hutt Valley tender process is proceeding before the revised legislation is in place.

''We do not want to disrupt the GWRC's tender process, and have chosen to register the two services in their totality, seven days a week, even though this has meant incorporating the unprofitable 'tail' of each service in the registration.

''This means the GWRC will be able to proceed without delay to call tenders for the remaining services ...

He says NZ Bus will ''vigorously compete'' for contract tenders when they are advertised. The commercial registrations are for three years, and Mr Emson says it will take that long to turn them into profit through investment, innovative marketing and excellent service delivery.

Despite the GWRC's 2008 report warning that registration of commercial services could be used as a tactic to disrupt the bundled route approach, Transport and Access Committee chairman Peter Glensor says the registrations are legal, and there are very limited grounds on which the council can decline them.

There is an ''over tender'' process that could override the commercial registration, ''but I don't think it's 'top of the pops' in terms of the way ahead'', Mr Glensor said.

There will be some subsidy for the two Hutt Valley routes, with GWRC picking up the cost of ticket concessions and the taxpayer picking up the cost of SuperGold travellers.

New tenders for Hutt Valley services are expected to be ready in about six weeks.

TARGET SET

Greater Wellington Regional Council is targeting 50 million public transport trips (trains, buses, harbour ferry) a year by 2016-17. The 2007-08 'actual' number of trips was 34.7 million.

Achieving the target will require patronage to increase at an average rate of 4.7 per cent a year, per annum, significantly higher than the 3.3 per cent it has tracked at in the recent past.

The target splits these trips into 25 million peak journeys and the same number of ''off peak'' journeys.

Mike Lee sounds weary. He, along with bus drivers and 80,000 Auckland commuters, is winding down from a long, tough week.

The Auckland Regional Council chairman has already made strong comments about home-grown infrastructure company Infratil, the successful group of investors behind the standstill of much of Auckland's bus system, and he's not finished.

Infratil invests in airports and energy offshore and public transport at home, running buses in Auckland and Wellington through subsidiary company NZ Bus.

On day five of the lockout of the bus drivers, Lee threatened to sack NZ Bus for not fulfilling route contracts, only to find this was not so easy.

The process is more drawn-out than he anticipated.

Lee sounds mystified about the tactics of the "reckless", "clumsy" and "ruthless" men in striped suits who are behind Infratil, the ones really calling the shots over required profit margins and future vision.

Though the buses are back on the street, for now, he says the seven-day lockout, which disrupted life for so many school students and workers, has taken other tolls.

He estimates the region will lose nearly a million passengers from the annual scoresheet, vital statistics which are needed to justify extra investment in public transport.

There's another big impact, too. When you have a dispute such as this, people go away from public transport.

"It's enormously disruptive but they do find alternatives and if they're going back to their cars then, you know, you've got to try to get them back out of their cars.

"There will be a lasting impact."

Lee hesitates at the next question. He's somewhat at a loss, he admits tiredly. He's not quite sure how to fix this problem of ensuring buses stay operating despite employment disputes.

Though this dispute between NZ Bus and its drivers is patched for now, it is only a plaster and could erupt again.

To be honest, Lee says, he has other important things to be doing, such as getting ready for the looming Super City instead of figuring out disputes involving buses.

So when he is asked how he plans to stop such massive disruption again in the future, he is thrown for a minute. "I would much prefer we didn't have this going on but, however, you ask a valid question. What is going to be done about it? "We need to sit down with Arta (the ARC's transport co-ordinating agency) and discuss that very point and resolve on a plan of action, a contingency plan. We can't hand over a mess to the Super City," he says.

Lee says he has been quite shocked at the hardline tactics of Infratil/NZ Bus. The drivers wanted to work to rule while their pay claim was on the table but the bosses locked them out - and, in doing so, locked out Aucklanders. Infratil/NZ Bus have taken such a militant approach, he says, he thinks they have done serious damage to their reputation.

Lee describes the Infratil directors as "guys with Beatle haircuts and striped suits" and "cheery chappies". "You know, if you meet them you're thinking you're dealing with Herman's Hermits, but actually these guys are ruthless operators."

Ratepayers and taxpayers spend around $94 million in subsidies for buses every year - and $58 million of this goes to NZ Bus.

Given the large public subsidies, we asked Infratil CEO Marko Bogoievski whether his organisation cares about bus drivers and Aucklanders.

Bogoievski explains Infratil is a huge investor in both New Zealand and overseas and has been for 20 years. The company's intention is to grow businesses and for them to flourish. He doesn't see how improving and upgrading bus fleets, rebranding buses and schedules, training bus drivers and introducing technology is anything other than a positive for Aucklanders.

He says he understands the havoc the dispute has caused Aucklanders and says this was not an outcome anyone wanted to see, "so obviously you're in the middle of a dispute and it's a live conversation, we're trying to get it resolved".

What about the perception that Infratil directors are ruthless, cold and hard-nosed?

He replies: "We've been around for a long time and we've earned every bit of our positive reputation as a high-quality investor, so the proof's in that really." Infratil is trying to get the best situation in Auckland too, he says. Employees, shareholders and customers of all their services are important parts of the overall equation but they're looking long-term, not just at whether buses run next week.

They have to manage the overall cost of delivering public transport services in the long run, he says.

Every time there is a tender from a local transport authority to run a major bus or public transport service, tenders are given to the lowest-priced operator.

In the process, service levels and the amount of compensation are determined - there is no free lunch for anyone.

He says if you end up increasing cost structures in the medium term, you end up increasing public subsidies for public transport, but that is a policy issue for planning agencies like Arta. Bogoievski also says he believes the bus drivers are quite well compensated relative to their peers.

"The average wage of a driver, if they were to accept our proposal, would be higher than the average wage of a New Zealander."

One of the accusations against Infratil is that they have been lobbying the Government to repeal parts of the new Public Transport Management Act, which would require them, as a commercial operation, to open their books regarding the public subsidies.

Bogoievski says the problem with the Act is that local authorities want to control every aspect of public transport, including confiscating commercial routes that NZ Bus and other operators have been investing in for a long time.

Infratil's preferred model is to let private provision of these services reduce the need for subsidies, "so in effect, Infratil's leading the charge, through NZ Bus, to try to manage the overall cost of public transport to Auckland ratepayers".

Bogoievski says the Infratil directors are not mean people, "no, I think we're pretty average blokes who are just trying to continue investing in New Zealand and we hope we can".

The company stands by its achievements, he says.

"I know it's provocative to refer to merchant bankers sitting in Wellington, but come down and have a look, have a cup of tea with us, we don't look anything like that."

Part of the problem with buses is division over the extent to which public transport should be publicly controlled and run, or whether private operations are best.

For Infratil, obviously private operators must have a big say in how they run.

Others, such as New Zealand urban researcher Dr Jago Dodson, say local authorities have far too little control.

The Brisbane-based Griffith University research fellow warns strongly against any watering-down of the Public Transport Management Act, saying we are already seeing Infratil starting to test its strength in the current dispute with the bus drivers.

Transport Minister Steven Joyce says he is certainly taking a look at the Act because of concerns from NZ Bus and other operators about the ability of councils to contract over the top of commercial services where they are operating successfully and don't require a subsidy.

He doesn't cosy up to anyone, he adds, pointing out that though he has talked to NZ Bus, he's probably talked "way more times" to Lee, "but no one accuses me of cosying up to Mike".

For Lee, the end is not in sight. Joyce has announced a new Auckland Transport Agency which will operate under the Super City, replacing existing Auckland transport entities.

Lee says though the river of public money will flow - "$160,000 a day into Infratil once normal services are resumed" - public control and accountability over it will be weakened by the Minister's new transport authority.

"So when there's another lockout in the Super City, people will ask the Super Mayor what's going on and the Super Mayor will probably have even less power than I do now to get it sorted."

SERVICE CHARGE

The contracting of services for bus routes is a complicated business and though many routes qualify for subsidies, others don't. Ratepayers and taxpayers pay around $94 million in subsidies for buses each year.

Around 26 per cent are commercially run, so don't get a subsidy, but even these will often get a concessionary fare top-up. The bulk of the services - 74 per cent of which are contracted services - are paid for through subsidies.

Even many of the main routes, including the Link bus, and main arterial corridors such as Dominion, Eden and Sandringham Roads, have parts of the service provided through subsidies.

Arta says without the subsidy the number of weekday peak period services offered along Dominion Rd, for example, would be significantly reduced and services after 9pm may not be provided.

More than a thousand Auckland bus workers facing being locked out in a row over 10 cents an hour say they will report for work as usual on Wednesday morning.

Infratil-owned NZ Bus has told the workers, including 875 drivers, that they will be barred from 4am on Wednesday – a move likely to plunge Auckland’s public transport system into chaos.

The lock-out will affect staff at the Metrolink, Go West, Waka Pacific, North Star, Link and City Circuit bus services.

Snapper will not rule out installing its smartcard system on parent Infratil's 705 Auckland buses, despite probably missing out on a deal to provide an integrated ticketing system to the Auckland Regional Transport Authority.

The authority announced last week that it had selected a consortium led by French technology firm Thales as its preferred supplier of a system that would let passengers pay for bus, train and ferry travel using a single smartcard. The system is due to be ready in two to three years.

The New Zealand Transport Agency, which would pay for 60 per cent of the project, hopes the Auckland system will become the rump of a "national integrated ticketing programme".

Transport Agency chief executive Geoff Dangerfield says it "is not starting from a blank sheet of paper", acknowledging existing investment in smart ticketing systems in Wellington and Christchurch.

The agency said that its approach would "provide the potential for individual public transport operators to decide which electronic ticketing or smartcard system best meets their business needs".

Snapper Services chief executive Miki Szikszai would not say whether he believed that gave Snapper the green light to install its system on Auckland buses, regardless of the outcome of the Auckland tender. "We are obviously considering the wide range of options," he said.

After apparently conciliatory comments in the wake of Arta's announcement that it had selected Thales for Auckland, Mr Szikszai questioned the rationale for the investment of tens of millions of dollars by the Transport Agency.

Snapper is believed to have offered to extend Snapper to Auckland at no cost to taxpayers.

"There is a really important question which is not being asked, which is, `Why is an investment being made into a system when one already exists?' There was a statement made by NZTA saying they didn't want to invest into a system twice, and I think we should ask why they are investing once?"

The agency says there are several smartcard-based bus ticketing systems in New Zealand.

"Arta have sought a proven system that will also support rail ticketing." It would report on the appropriate process for operators to fund and provide their own equipment.

SNAPPER IN TAXIS

Snapper will be installed in all 1000 taxis in the Wellington region early next year, says Snapper Services chief executive Miki Szikszai.

The agreement follows a decision by Greater Wellington regional council to issue Snapper cards to 7500 disabled people, who cannot use public transport, for use in taxis.

The council pays for their taxi travel under its Total Mobility programme, costing $2.2 million a year, which is paper-based.

Transport and access committee chairman Peter Glensor says the new system will be far more user-friendly for clients.
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Mr Szikszai says Snapper terminals will need to be adapted for use in taxis. Once they are installed, the public, as well as those enrolled in the Total Mobility scheme, will be able to pay for journeys using Snapper.

Don't you love the strange bedfellows MMP throws together? Any day now, all going to plan, Parliament will pass a bill permitting the control of Auckland's highly subsidised public transport network to return to public hands. And joining Labour and its more natural allies such as the Greens and Maori will be that supporter of free enterprise, the Act Party.

Leader Rodney Hide assures me his planned move is very "pro-market". He says Auckland Regional Council (ARC) chairman Mike Lee had lobbied him, arguing that a party representing consumers and taxpayers had to support such a bill, and after consideration "I said, absolutely".

Mr Hide says what the bill allows "is exactly what you'd want to do if you were looking at spending a $94 million subsidy and looking at getting best value for money, so I was on board".

Not on for the ride is the National Party, which, when in power 15 years ago, forcibly privatised the publicly owned Yellow Bus Company, and, strangest of allies, Winston Peters and his New Zealand First Party.

The Public Transport Management Act won't drive private bus operators from Auckland's commuter bus network. It just gives the Auckland Regional Transport Authority (ARTA) the power to design an integrated passenger transport network that serves the needs of the passengers and the subsidisers first, rather than the bus company shareholders.

Merchant bankers Infratil, owners of Auckland's biggest bus operator, New Zealand Bus, have been lobbying around Parliament as though Karl Marx was coming up the hill behind them. But the case for the status quo does not stand up to scrutiny.

When Infratil bought the old Stagecoach Bus company in 2005, patronage in the year to June was 43.1 million passenger trips. A year later, the service had shed 900,000 passenger trips. By the year ended June 2007, a further 200,000 passengers had disappeared.

It took a war in Iraq and rocketing fuel prices to reverse this downward trend. In the year to June 2008, passenger numbers bounced back to 2005 levels. In that time though, subsidy payouts soared. When Infratil entered the scene, public handouts to regional bus operators totalled $45 million. Just five years on, the budgeted annual subsidy has more than doubled to $93.1 million.

As ARC chairman Mike Lee wryly noted in a letter to Transport Minister Annette King this year, "It would appear that the private bus companies in Auckland are much more interested in increasing bus subsidies than increasing passenger numbers."

As the law stands, despite these huge subsidies, ARTA cannot inspect operators' books to check whether they are gouging the system. Their need for a subsidy has to be taken on trust.

ARTA has no powers to design a transport network linking buses and rail and ferry services into a rational, user-friendly web. It can't even insist on integrated ticketing. Operators can cherry-pick the profitable routes, calling them "commercial", then stand aside and wait for the public to come to them, cap in hand, offering subsidies if they will graciously fill in the "non-profitable" gaps left unserved after the plums have been plucked.

ARTA and ARC lobbied strongly for the right to introduce a fully contracted system in which ARTA would design a network of services where, for example, subsidised buses didn't compete with subsidised rail services. Regional councils up and down the country backed Auckland's campaign, even though they were not faced with Auckland's problems.

The bill initially offered a compromise which annoyed both sides. Ms King was sympathetic to ARC's case and has enlisted the Greens to introduce the amendment supporting the full contract model. With luck, and Rodney Hide's support, the amendment will be passed tomorrow or Thursday and the bill itself soon after.

The revolution won't occur overnight, more's the pity. First, a new regional public transport plan will have to be drawn up and go through the normal consultation processes. Seeking changes to existing commercial services requires a 12-month transition and existing contracts don't expire until the end of 2009 and the beginning of 2010.

The only quandary now is what the National Party might do if it wins the election. With such broad support in Parliament and across Auckland for this bill, leader John Key owes it to voters to signal whether he will throw this act in with the recently passed Regional Amenities Funding Act as bad law he will repeal if he becomes Prime Minister.

Further details of transport smartcard project revealed

Auckland’s smartcard-based integrated ticketing project is shaping up to cost over $100 million, including operating costs for the first ten years.

Computerworld understands a decision on a contract for Auckland is due in September. The short-list is thought to comprise Infratil (with Unisys); based on its Snapper smartcard launched recently in Wellington; Downer EDI, with Wayfarer; and Thales, with Transfield.

The programme director for the Auckland integrated ticketing smartcard project, Greg Ellis, last week wrote to short-listed vendors assuring them that the tender process is still open, after Computerworld Australia (see here) reported Ellis saying at a conference that West Australia’s SmartRider system is one of the world’s best.

The reporter suggested the Auckland system would be modelled on SmartRider, provided by Downer EDI. Ellis clarified to Computerworld last week that SmartRider is one of the models Auckland will follow. He also mentions the Brisbane system as one that has “influenced thoughts”.

Ellis would not be drawn on the cost of the project because of tender negotiations, but referred Computerworld to the publicly available cost of the Brisbane project, at $142 million, as an example.

That, he says, is a whole-of-life cost. The project is in two parts: installation and implementation; then 10 years operational running. The successful bidder would probably set up a separate company to handle operations.

However, a range of industry sources in New Zealand estimated the cost of the project is between $100 million and $250 million.

Downer EDI, which implemented of the Perth system, on behalf of Wayfarer, already has technology in place in Auckland’s transport system. Ellis confirms that Downer EDI has “expressed interest” in the Auckland project.

Computerworld understands that while the Auckland Regional Transport Authority gets to sign off on the contract, the funding will be provided by the Auckland Regional Authority and by Land Transport NZ.

Integrated ticketing systems have become a feature of public transport in cities in the developed world. Some countries, such as the Netherlands and Switzerland have national integrated ticket systems. In the UK and Australia, such systems have been or are being launched in major cities. London is a case in point with its Oyster system

But these projects have also been complex and high-risk. The New South Wales government has taken legal action against its supplier ERG, seeking to regain losses of around A$90 million. ERG has counter-sued for A$250 million in compensation for termination of the contract.

In Melbourne, the overdue A$500 million myki smartcard ticketing system has had its completion date extended. It was originally due to be completed in 2007; that’s spun out to 2012 with another likely cost over-run of A$212 million. This month, South Australia announced it would seek to automate ticketing for public transport by 2009/10.

It has budgeted A$29 million to kick-start the system.

There are political dimensions to the Auckland project. The government wants more people to use public transport: there is the 2011 Rugby World Cup to consider; the Kyoto Protocol is to be revisited soon, with the associated carbon costs of private transport to the fore.

If the Auckland project is successful, it will almost certainly be rolled out further.

Wellington, for one, has indicated it has a watching brief on the project.

Infratil says it has no plans to sell its minority stake in Wellington bus operator Mana Coach, even though the High Court has ruled out a planned merger with its Wellington bus business.

Infratil subsidiary New Zealand Bus runs the scheduled bus services in Wellington and the Hutt Valley. Mana Coach operates mainly north of Johnsonville and has limited runs into Wellington. Infratil acquired its 26 per cent holding in Mana Coach through the purchase of Stagecoach New Zealand in 2000.

New Zealand Bus was fined $500,000 and costs of about $600,000 by the High Court in 2006 after it tried to buy the rest of Mana Coach without Commerce Commission approval. The Mana Coach vendors at the time, Kerry and Ian Waddell, were found guilty of being accessories to the transaction, but not fined. Their conviction was subsequently overturned on appeal.

The Waddell family sold its 74 per cent stake in Mana Coach to merchant bank Bancorp, which in turn sold it to British transport entrepreneur Brian Souter last December.

Infratil executive Paul Ridley-Smith said yesterday that he expected the ownership structure of Mana Coach to continue in its current form.

Mr Souter was an experienced bus operator as a founder and major shareholder of Stagecoach, he said.

Last week the Court of Appeal turned down an appeal by the Commerce Commission against the High Court's decision not to convict Infratil for its role in the transaction. But the judgment upheld the $1.1 million fines and costs for New Zealand Bus, which were paid in 2006.

British transport entrepreneur Brian Souter has re-entered the Wellington bus business, with Souter Holdings buying Mana Coach Services from merchant bank Bancorp.

The price has not been revealed. Mr Souter founded multinational transport firm Stagecoach and is still a major shareholder.

Mana Coach runs 120 buses in the Wellington region, including Newlands Coach Services.

Stagecoach New Zealand was sold to Wellington investment firm Infratil two years ago for $250 million. Stagecoach New Zealand runs scheduled bus services in Wellington and the Hutt Valley as well as Auckland.

Bancorp bought its stake in Mana Coach from the Waddell family in July last year for an estimated $24 million - a day after Infratil said it would appeal against a High Court decision preventing it from buying all of the company. Infratil already owns the remaining 26 per cent of Mana Coach through the purchase of Stagecoach. Bancorp described its purchase of Mana Coach at the time as a "long-term strategic investment in infrastructure". Infratil finally lost its appeal against the High Court decision last month.

Bancorp managing director Craig Brownie said Mr Souter made an approach to buy Mana Coach "three or four weeks" ago. Mr Brownie denied that Bancorp had been warehousing the shares on behalf of Infratil while it awaited the outcome of its appeal.

Infratil has consistently refused to say whether it had done a deal with Bancorp to buy the shares if the High Court appeal had succeeded.

Mr Brownie said Bancorp always had Infratil in mind as a potential buyer of the Mana Coach shares if it had been allowed to bid for them. "But it would be fair to say that New Zealand Bus would see Souter Holdings as a good co-investor long-term. "As a 26 per cent shareholder they had to be happy with the Souter company coming in. Even though they lost the court case, they are very happy about the outcome."

Returning the company to the control of a highly experienced operator was the best outcome for the business, he said.

Former Stagecoach New Zealand managing director Bill Rae has been appointed chairman of Mana Coach, replacing Mr Brownie, and Geoff Norman will continue as chief executive. Kerry Waddell has left the board, as a Bancorp appointment.

Infrastructure investor Infratil has reported a 49 per cent fall in first half net profit to $12.5 million.

The reduction in the six months to September 30 compared to $24.6 million in the corresponding period a year earlier.

It followed a rise in interest costs to $68.9m from $31m, with Infratil saying today that $20m of the interest increase reflected the consolidation of TrustPower. Depreciation and amortisation was $35.9m, up from $19.8m.

Earnings for the six months before interest, tax, depreciation, amortisation, realisations and impairments, and fair value movements of financial instruments (ebitdaf), was $165m, from $69m a year earlier, Infratil said.

The operating surplus was $82.2m from $29.3m.

Infratil has a majority stake in power company TrustPower, owns Glasgow Prestwick, Kent International and Lubeck airports, two-thirds of Wellington International Airport and a small share in Auckland International Airport. It also has investments in NZ Bus and stakes in Australian power generators and retailers.

The company is to pay a fully imputed interim dividend of 2.5 cents per share.
Infratil said that as a long-term investor, it considered each of its core investment sectors would deliver attractive returns.

The global trend to renewable energy and public transport was only starting, air travel was increasingly within reach of the world's growing middle classes, and restructuring of the Australian energy sector continued, the company said. "Infratil's businesses are continuing to build long term value through efficient operations and providing excellent services in a manner which ensures widespread community support."

Developments during the half-year illustrated the disparate nature of its businesses and the relative complexity in measuring their performance, Infratil said.

As at September 30 debt comprised 42 per cent of Infratil's capitalisation. That reduced to 39 per cent if the proceeds of the October issue of partly paid shares was included.

The issue of new shares was undertaken to ensure Infratil was well placed to be able to take advantage of opportunities should current financial market volatility result in further deterioration. With that possibility in mind, the company had started to purchase hedges against equity market risk, with $1.5m of those hedges expensed during the half year, Infratil said.

Infratil shares closed at $2.93 on Friday, having ranged between $2.26 and $3.25 in the past year.

The company said today that from next June it would stop issuing quarterly reports and work to upgrade the quality and materiality of its monthly reports. Reporting had been done quarterly since 2004, but that frequency had attracted some negative feedback from share analysts and institutional investors. Investors and financial analysts interviewed said the two quarterly reports were not of particular benefit, given the ongoing information Infratil provided about its operations, Infratil said.