Rail capacity
“This is the first time the U.S. brain is being used in the U.S.,” announced Don Horner at the March 7 joint meeting of the Honolulu Authority for Rapid Transportation (HART) project oversight and finance committees, the latter of which he chairs. Horner was referring to the driverless trains of Honolulu’s future heavy elevated rail system, which, Ansaldo claims, will employ the first such smart trains in the U.S.
And, “This is the first public glimpse of what the train will look like,” said Dan Grabauskas, HART CEO, as an illustration of a sleek passenger car appeared in the PowerPoint presentation by Ansaldo Honolulu Joint Venture (AH), which has been contracted by HART to build and operate the rail system for $1.4 billion.
“It will be one of the nicest trains in the U.S.,” said Massimo Mele, AH project principal, sporting a black/grey, hibiscus print, Euraloha shirt.
“I know you don’t want to brag, but it will be the nicest,” Grabauskas corrected him with a smile.
The top item on the agenda was the rail builder’s solvency. AH presented an “Update on Financial Capacity” for AH’s Italian partners Ansaldo STS (rail control and operating systems) and AnsaldoBreda (train car builder) and their parent company, Finnmeccanica, whose tangible net worth was in the negative–to the tune of -$5.059 billion–through September 2012. Finnmeccanica’s debt rating has been downgraded to junk status by S&P. It owns 40 percent of Ansaldo STS and 100 percent of AnsaldoBreda, whose negative figures included tangible net worth of -$528 million and net income of -$912 million in 2011, and net income of -$70 million through September 2012.
In 2011, Finnmeccanica, a defense and aeronautics company trying to divest its transportation arm, according to Mele, put AnsaldoBreda up for sale but had no takers. In February, Finnmeccanica CEO Bloomberg Giuseppe Orsi was jailed in Italy on charges of corruption.
If AnsaldoBreda were sold, “both companies [Ansaldo STS and Finnmeccanica] remain obligated” under the contract, said Christian Andi, CFO of Ansaldo STS, appearing via Skype from Italy, where a leg broken while skiing prevented his attending in person. The Honolulu contract is backed by highly rated surety bonds totaling $574 million.
Mele presented Finnmeccanica as “moving slowly towards [being] profitable” and stressed that “a majority,” or six out of nine Ansaldo STS directors, “are independent of Finnmeccanica.” Presumably as further proof of Ansaldo STS’s current solvency (tangible net worth, $552 million and revenues of $1.6 billion in 2012), Mele added, “we generally [lend] money to Finnmeccanica.”
As of September 2012, AnsaldoBreda had new orders totalling $236 million and a residual value of contracts in process (backlog) of $3.8 billion. Much was made of a November 2012 contract with Miami for a driverless train costing $298 million, “versus $200 million for our train,” interjected Horner. No mention was made of the loss of a $300 million contract with Los Angeles due to delivery delays.
Also on the agenda was timely delivery of Honolulu’s rail system, with the first train due to arrive by March 2015. Acknowledging project delay “because of [federal and state] lawsuits” against the city, HART is “working on a revised schedule,” Grabauskas said. With regard to the Ansaldos, “They are on track, pun intended,” he said.
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