Audit: Brightline's future in doubt amid financial troubles
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A Brightline train in Miami. Photo: Martina Tuaty/Bloomberg via Getty Images
Auditors for Brightline say there is "substantial doubt" that the private train company can avoid bankruptcy due to a lack of cash needed to pay off debt.
Why it matters: In car-dependent South Florida, Brightline has struggled to raise its fares or attract enough passengers to sustain the business.
- Bloomberg Law obtained an assessment of the company's finances by auditor Ernst and Young, which lays out Brightline's dire financial straits.
The big picture: The company, which launched in 2018, runs local trains between downtown Miami and West Palm Beach, but the region's lack of transit infrastructure limits last-mile connectivity.
Driving the news: Auditors wrote that Brightline "has stated that it does not currently have the liquid funds necessary to service its debt and meet such other obligations as they become due."
- Brightline — which has about $5.5 billion in debt — is supposed to pay $117 million in interest this year, WLRN and Bloomberg report.
- The company has delayed payments that were due earlier this year.
The latest: Bloomberg reports that Brightline is seeking to avoid a possible bankruptcy by searching for third-party investors.
Follow the money: Brightline made $214 million last year, an increase of 14%, but only half of what the company was expecting, WLRN reported.
- The rail line reported an operating loss of $127 million last year, not including interest payments.
What they're saying: DePaul University professor Joseph P. Schwieterman — an expert in public policy, urban planning and transportation — tells Axios that bankruptcy isn't likely to threaten Brightline's operations because the service is generating a "positive cash flow."
- Brightline's experience also shows there is strong demand for high-quality train service in Florida, he wrote in an email.
- "There's plenty of room for optimism that Brightline service will continue with few changes after a bankruptcy filing," Schwieterman says.
- "The railroad covers its operating costs, but the high interest payments due to its debt [are] its Achilles heel."
Yes, but: Brightline is facing strong headwinds due to Florida's car culture, lack of transit networks and price sensitivity among riders, which makes it hard to raise fares.
- For tourists visiting the state, having your own car is almost a necessity, he added, and it's easy to find an affordable rental.
- "Neither Miami nor Orlando have transit networks like major cities in the Northeast or West Coast where riding local buses and trains is a big part of the culture."