Tranz Rail pledges to talk before line closures

Tranz Rail has promised that it will not close unprofitable rail lines around the country without first discussing it with the Government.

Tranz Rail managing director Michael Beard said he had made his "talks first" promise to Finance Minister Michael Cullen.

He also said the company had confirmed a five-year contract with Solid Energy to transport coal from Ohai in Southland to the Clandeboye dairy factory near Timaru.

On Friday, Mr Beard said the company would present the Government with a proposal.

If it did not hear by the end of the month that help was forthcoming, "we will close the unprofitable lines and operations".

The closures would account for up to a quarter of the company's network.

Lines under threat include much of the Northland network, the Napier to Gisborne route, the coal routes, the line from the West Coast to the port of Lyttelton, and the network at the bottom of the South Island.

Tranz Rail is talking to the Government about various forms of assistance, ranging from subsidies for unprofitable routes to the Government buying back the tracks.

Progress Southland chairman Wayne Affleck said yesterday he was "bitterly disappointed" that rail closures had again been raised, but hoped it was just politicking to encourage the Government to step in.

Environment Southland chairman Ted Loose said the regional council would support a Government buy-back to keep rail links vital to Southland.

On Friday, Tranz Rail announced a third quarter operating profit of $19.1 million, $10.2 million below its forecast, but in line with an April 7 profit warning.

Mr Beard said on Friday that it had kept its unprofitable routes open for the past 18 months because the Government had asked it to do so, while the talks were on.

Routes in danger

Most of the Northland network.

Napier to Gisborne.

West Coast to Lyttelton.

Most of the network at the bottom of the South Island.

- NZPA