Saturday, October 17, 2009

Will someone please send BC ferries a lifeline

A pending financial disaster is on the horizon for BC ferries, interest payments on a 1.4 billion$ capital debt is going to sink them.

A failed privatization, well, that`s not quite correct, BC ferries is on the verge of financial failure but as for it being privatized, is it ? I mean really, there is but one shareholder of BC ferries, US, the province, there is no private money floating around this sinking corporation. From all the investigating that I and others have done the only conclusion that I or any intelligent person can arrive at is.......The only reason BC Ferries was so-called privatized was to either hide debt from the public or to ultimately bankrupt BC Ferries, but that begs the question, if and when BC ferries goes bankrupt who would buy it? The only way it can turn a profit is to either jack-up the price of fares or cancel all of the runs that aren`t profitable.

Lets examine for a moment those two options, BC Ferries since they were privatized have continually jacked up prices and the result of that has been a steady decline in the ridership, it`s what I call ....Raising prices to the point of diminishing returns, and...That other option of cancelling non-profitable runs will be death blow to the gulf islands and the north.

First off, every highway,road, say like the sea to sky highway that has just had a 1 billion$ dollar upgrade done to it (part of a 3.5 billion$contract) gets subsidized through fuel and taxes, why should BC ferries and our marine highway be treated any different? I`m going to share some financial numbers from BC Ferries that I got from Hansard debates on the ministry of transportation but first I would like to say that BC Ferries as a private company is doomed to failure, and, the ridership rose significantly during rate specials on runs, all runs and times that rate specials didn`t apply were down in ridership from previous years but mid-week specials with reduced fares had increases in ridership, which proves beyond a shadow of a doubt the theory of pricing to the point of diminishing returns.

First off, if BC Ferries was part of the government they would be able to borrow money cheaper, you see folks, because BC Ferries is a so-called private company they have a credit rate of...(A)...but as part of the BC government they would get a credit rating of Triple AAA.....On a 1.4 billion$ dollar capital debt that adds up to millions per year in extra finance charges to BC Ferries.

Lets go over a few shocking numbers...Two years ago BC ferries has a DEBT to EQUITY ratio of 4 to 1 (4 times the amount of debt to 1 part Equity) and as of the end of the last fiscal year that had risen to 5 parts debt to 1 part equity, thats shocking, that can`t go on...

In 2008 interest payments accounted to 46% of earnings---In 2009 interest payments accounted to 87% of earnings--Up 51% in one year.

Lets dig a little deeper into the numbers---In 2001 BC Ferries had 38 vessels and 47 terminals and 273 managers......In 2008 BC Ferries had ..Still 38 vessels and 47 terminals and 450 managers....In 2001 BC Ferries carried 21 million passengers and 7.9 million cars.....In 2008 BC ferries carried 21 million passengers and 8.5 million cars.

Lets examine that shall we, under privatization the amount of managers working for BC Ferries has almost doubled yet the amount of passengers carried remained flat, although the amount of cars have risen slightly (6%)...Hardly earth shattering numbers under David Hahn.

Although to add....The 2009 numbers have fallen badly, lets examine them ....First lets look at the staggering interest payments on their capital debt...In 2008 the interest payments on their debt was 33 million$ dollars....The interest payments on their debt in 2009 has risen to 50 million$ dollars.

Lets look at the last quarter results for 2009 (April/May/June) The interest payment was more than earnings ...In fact, BC Ferries went in the red by 3.6 million$ dollars, in other words the interest payments on their massive debt has now overwhelmed earning capacity....YIKES,that`s all I can say is YIKES!

Here are another few things that are disturbing, first off, BC Ferries as a Quasi/Private company means we can`t FOI them..(Freedom of information)...And in a 2006 report by our courageous Auditor General John Doyle (who continually does great work only to be slagged by the province) ..Anyways..The Auditor General found it troubling that .

The ferry commissioner, the ferry authority,the independent regulator and the authorities board of directors are all paid by BC Ferries, Say what, in other words, the people who are charged with holding BC Ferries to task over safety and the public interest all get PAID by BC Ferries......

Well, that is a problem, those who are in charge of regulations and safety should never be put in a position where the company it`s charged with protecting the public from control the purse strings! (You can read the exchange between Gary Coons(NDP from north island) and Shirley Bond(School closer now minister of transportation) in Hansard here..Check out from pages 1029 to 1036 )

BC Ferries are in so much trouble that now they are going to inconvenience thousands of people all over Vancouver island and people trying to get there by cancelling sailings from Horseshoe bay to Nanaimo and return ..Starting from a few days ago continuing until the spring of 2010, although the runs will be put back on for the olympics,Figures, the skys the limit for the olympics, anyways, all of that inconvenience to save an estimated 450.000.00$ thousand on fuel, because you see folks,it`s only fuel that will be saved because the crew will be aboard getting paid, and according the Mz Marshall from BC Ferries, they will do routine maintenance and cleaning, please,if anyone rides on that vessel on the earlier run(because the crew will still make two runs each day) please let me know if it`s extra clean!(you can read what the mayor of Nanaimo has to say about the cancelled runs here)

And there were requests from Nanaimo and others to the Province and to Shirely Bond to intervene to keep the sailings, of course Shirey Bond is a useless bitch and as for the government well, Bond said.."We won`t intervene over politics" Which is a lie because the province did intervene last fall over sailing cuts and fare pricing, well,that was with an election on the horizon,no such immediate pressure for the LIAR and LAW breaker Gordon Campbell.(Read about the request for the province to intervene here)

Gordon Campbell couldn`t run a lemonade stand.

The Straight Goods

Cheers-Eyes Wide Open


Kim said...

Grant G. you rule! That ferry corp. is our TransCanada Highway! The reason they cancelled that ferry was at the request of Seaspan, over unfair competitive subsidies on overnight cargo transport. So "consumers" that is, residents, of the island lose, corporations win, what's new?

Norm Farrell said...

One of the new "Coastal Class" ferries was idle on two recent Victoria trips so I chatted to a few employees of BCF. They aren't supposed to talk about ship problems but did. It was confirmed the new ferries cannot match the Spirit Class ships for load and fuel consumption but they also have noise and vibration problems, being too prone to "rattling the dishes." Compared to the new German ones, it is significantly cheaper to operate the Spirit Class ferries built in BC in 1994 by a government led by some character named Mike Harcourt.

Anonymous said...

keep your articals !!they are a great read and shakes us out of the fog of everything is just great in bc the best place on earth the phrase has really become a sick joke

Grant G said...

Thanks for that Norman....

It`s a well known fact,excessive fuel being guzzled by the German Ferries and smaller payloads...

And guess what,that problem isn`t going to go away,in fact its going to get worse, oil reached new 2009 high last week,over 70.00$ per barrel.
What happens when oil goes to 150.00$ again,or more,because it`s not a matter of if but when!

Thanks Kim and Anon 9.23 am

Cheers-Eyes Wide Open

Anonymous said...

Correct, CEO's like Hahn probably make and Million dollar salary, and I wonder what perks go with that, bonus's maybe (for such a fine job) ha, These CEO's are nothing but leeches, Hahn (as well as other pigs at the trough should take a pay cut and spread the wealth around. Divide 650k of his high falutin salary, and pay to keep some of those part time people who have worked for years but cannot get enough hours to get a full weeks work. These guys & gals don't give a dam they look after each other but one of these days people will get mad enough and demand different outcome.