UK rail giant eyes Kiwi trains

London-listed international services company Serco is looking at how it can turn New Zealand's long-distance passenger train services into a profitable tourist-orientated business.

Minister of Transport Steven Joyce has confirmed the company sent him a letter recently saying it was preparing a paper on the train services.

He expected the company's ideas would be put into the mix of options for KiwiRail next year  when a strategic review of its business was completed.

Serco was part of a successful consortium bid, along with Macquarie Group in 1997, for the passenger rail business of Australian National after it ran up a loss of about A$80 million for the Australian government in that year.

It later bought out the consortium and now under Great Southern Rail, operates the iconic Australian train services, The Ghan, The Indian Pacific and the Overland as profitable tourist trains.

Serco has 55,000 employees in 35 countries. It is not new to New Zealand, having at one stage been involved in property and asset management with 800 staff and annual revenue of about $70m and a contract order book of about $160m.

But in 2004, it sold the business to infrastructure and maintenance company Transfield Services for $10.7m.

It still does some business in New Zealand servicing defence.

Globally, it manages facilities, projects and IT systems and has created new businesses in hospital and transport system management. It also runs scientific establishments, and provides critical information to manage traffic, maintain buildings, operate railways and detain offenders.

The New Zealand Government paid Australia's Toll Holdings Ltd $690m for the New Zealand rail and sea ferry business in May last year as the best way to increase investment in the industry.

At the time Finance Minister Michael Cullen said it had been run down after the government sold it to Toll in the early 1990s. Several of the passenger services have been under threat because they weren't making a sufficient return.

- © Fairfax NZ News