The most successful American train company of the last century may have been in “Atlas Shrugged.”
A recent audit of Brightline Trains Florida shows that the company is in serious financial trouble. Ernst &Young said it has “substantial doubt about the company’s ability to continue as a going concern.” In other words, it doesn’t have enough money to pay its bills.
The company has $5.5 billion in debt. But 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,” the audit found. The company is reportedly looking at options to avoid bankruptcy.
While the operations of a Florida train company won’t affect many Las Vegas residents, that name should sound familiar. Brightline West is working to connect Las Vegas to Los Angeles via high-speed rail. Both Brightline companies are backed by the Fortress Investment Group.
Brightline West says it wants to move forward with construction. That might be a formidable challenge. The cost of the project has jumped from $9 billion to more than $20 billion. Taxpayers, via the Federal Railroad Administration, have already kicked in $3 billion. The company is hoping to receive a $6 billion loan from the federal government. It has also sold $2.5 billion in private activity bonds.
The history of rail projects in Las Vegas doesn’t offer much hope. The Las Vegas Monorail went bankrupt in 2010 and in 2020. Bondholders lost hundreds of millions of dollars. The Las Vegas Convention and Visitors Authority eventually bought it for under $25 million.
That’s chump change compared with what’s happening in California. In 2008, voters in the Golden State approved nearly $10 billion in bond funding for a high-speed train to connect San Francisco and Los Angeles. It was supposed to cost around $33 billion and be completed in 2020. Now the project is estimated to cost more than $230 billion.
Officials hope to open a 119-mile train line between Merced and Bakersfield in 2032. The connection between San Francisco and Los Angeles is projected to begin full service in 2040. Don’t hold your breath.
Airplanes have largely replaced trains for passenger travel and for good reason. They’re faster. They fly over obstacles. They can easily shift to new locations.
Yet, government bureaucrats remain dedicated to subsidizing trains in locations where the cost doesn’t justify the expense — assuming they even get built at all.
The market is sending a clear message, but government officials don’t want to hear it. Perhaps, they should learn who John Galt is.
