Aurizon announces further job cuts

Rail operator Aurizon announced further redundancies yesterday, with 103 positions axed mainly from their head office in Brisbane.

On May 8 Aurizon announced the progressive closure of the Redbank and Townsville rollingstock maintenance operations, which will result in 480 jobs cut progressively until 2017, bringing the total losses to 583 jobs.

The voluntary redundancy program has been estimated to cost Aurizon between $55 million and $65 million in FY2014.

Aurizon has also declared a number of impairments that will knock tens of millions worth of value from rollingstock, projects and construction.

A review of rollingstock has shown a surplus of 25 locomotives and 195 wagons , worth $20-25 million, which will be cut for operational efficiency.

Operations within the freight business that have been identified as non-core were determined as asset impairments of $15-20 million.

Assets under construction by Aurizon, Dudgeon Point and Wiggins Island Project Phase Two are now considered unlikely to progress, which will result in writedowns of $40-45 million.

Involvement with development of the East Pilbara Independent Railway was projected to be significantly longer term, requiring $19 million of capitalised project costs to be written off, as wekll as a write-down of $6 million worth of North Queensland expansion projects.

Aurizons new writedowns and impairments come to $130-160 million, bringing the FY2013/14 total to $352-382 million before tax, representing a significant loss to annual profits.

Aurizon CEO Lance Hockridge said the impairments represented the outcome of an in-depth review short, medium and long term market outlook.

“While that outlook for the resources sector is still very attractive, it is clearly more subdued,” he said.

“Our continuing focus on, and efforts to build, value and returns in our business through disciplined operations continues to show great progress.

“The speed and effectiveness of execution of the Integrated Operating Plan gives us the confidence to further refine what we consider to be the right size for our fleet while driving consistent, high quality performance for our customers.”

Aurizon have also announced that Aquila co-founder Charles Bass has agreed to sell his 10.7 per cent stake in Aquila to the joint venture of Aurizon and Baosteel Resources Australia.

Acquila CEO Tony Poli has also indicated he will accept the offer, and sell his 28.92 per cent interest in the company, which will give the joint venture more than 50 per cent of Acquila.

Baosteel and Aurizon have sought to acquire 100 per cent of Aquila Resources shares at $3.40 per share, an offer which expires on July 11.

Aqulia Resources is presently trading at $3.39.


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