Tranz Rail tipped to offload passengers

Tranz Rail may be on the verge of selling its passenger train business.

The sharemarket is buzzing with talk that the move is the centrepiece of a major shakeup to be unveiled on Tuesday at the company's annual meeting.

Sharebrokers said quitting the passenger side of the business made commercial sense.

New chief executive Michael Beard has been reviewing the company's operations. Passenger lines could be sold or contracted out.

Analysts also raised the prospect of Tranz Rail selling the Cook Strait ferry business, at a time of high fuel costs and increased competition on the route.

One analyst, who would not be named, said Tranz Rail might sell assets and concentrate on running services.

Another share analyst said dropping the passenger business would be no surprise, and widespread changes were expected next week.

Tranz Rail could also contract out other services in a bid to cut costs. In June, the company signed a deal with the Auckland Regional Council to sell access to the city's rail corridors for $65 million, and this is seen as an indication of Tranz Rail's approach to other parts of its operations.

Company spokeswoman Nicola McFaull said she could not comment on the reports, but said any plans would be revealed at the annual meeting.

- NZPA