It’s ironic that the mode of transportation so prominently featured in Atlas Shrugged is now so dependent on government largesse.
On Thursday, Brightline filed for bankruptcy. It’s a privately owned company that operates passenger trains in Florida. The company has said that the trains will keep running while the company restructures its debt.
Brightline couldn’t keep up with its $5.5 billion debt. The Wall Street Journal reported last week that the restructuring will allow it to reduce it to around $2.7 billion. The company will receive almost half a billion dollars in new financing.
Over the years, the company spent lavishly to fund new routes, including a new Miami-to-Orlando route in 2023. It projected would have 4.5 million long-distance riders in 2026. That didn’t happen. As of this August, the company had only around “1.4 million long-distance passengers,” according to the Journal. Its ridership projections turned out to be widely inflated.
As a result, the company didn’t bring in as much revenue as projected. Bloomberg reported that “revenue is running at about $240 million annually, less than a third of projections.”
Not great. Last year, it lost more than $230 million. That wasn’t just one bad year. Since it began operations in 2018, the company has yet to generate a profit.
This is happening in Florida, but there’s a clear warning for Southern Nevada. Brightline West has been planning to build a high-speed rail line between Las Vegas and Southern California. In April 2024, the company broke ground on the 218-mile project.
At the time, the project was projected to cost $12 billion and be ready before Los Angeles hosts the 2028 Olympic Games. Now, the price tag is expected to top $21 billion. It also isn’t expected to start moving passengers until 2029.
In 2024, the project received $3 billion via then-President Joe Biden’s infrastructure bill. The Review-Journal also reported it would get “$3.5 billion in private activity bonds from the Department of Transportation.” Private funding was supposed to cover the rest of the cost.
So much for that. Last year, the company applied for a $6 billion federal loan. In August, former Brightline West President Sarah Watterson stepped down from her position.
The market has spoken. Trains aren’t moneymakers and inflated ridership and revenue projections shouldn’t fool anyone anymore.
It’d be great if Brightline West could attract private investors, but taxpayers shouldn’t backstop another fiscal train wreck. Just ask John Galt.
