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SeaLink's $635m deal could hail more than bus services

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UPDATED | South Australian travel group SeaLink is taking over the company that runs Adelaide’s central bus services, which is also competing to control the state’s trams.

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SeaLink operates the ferry to Kangaroo Island, along with a series of travel and tourism services across the country.

The company announced this morning that it would buy Transit Systems Group – Australia’s largest private operator of metropolitan public bus services – in a $635 million deal.

Transit Systems runs bus services across metropolitan Adelaide, from Outer Harbour to Blackwood.

CEO Clint Feuerhersdt told InDaily this afternoon the company was competing to retain its contract over the North South service area, which under this year’s tender will include both bus and tram services.

“If we’re successful in retaining our own contract … we’ll be running the trams as well as the buses,” he said.

“Trains are something that we haven’t made a decision on.”

The Marshall Government announced in July that it would privatise the operation of the state’s train and tram services.

One of Transit Systems’ representatives downloaded the documents for the tender to operate the state’s light rail services from the Government’s SA Tenders website earlier this year, as did several other transport companies, including SouthLink – which currently runs public buses in Adelaide’s Outer North.

Feuerherdt will replace longtime SeaLink CEO Jeff Ellison, as part of the deal, which raises SeaLink’s staff to a total of more than 8000 employees.

Quoted in a media release announcing the deal this morning, Ellison says “the announcement today represents the start of SeaLink’s next phase of growth as an integrated multi-modal passenger services provider”.

“It will be transformational for us and provides us with the opportunity for significant international expansion using established (Transit Systems) businesses in Singapore and London.

“This has already opened the door for us to tender for new ferry operations in Singapore and London.”

According to the company, the sale means SeaLink will have a combined total of more than 8000 employees and operate more than 3200 buses and 78 ferries in New South Wales, Victoria, Queensland, South Australia, Tasmania, Western Australia, the Northern Territory, London and Singapore.

Feuerherdt is quoted in the release saying that both companies had developed leading market positions in their respective sectors.

“SeaLink Travel Group and Transit Systems Group have a similar history, with a shared vision to create and deliver world-class transport solutions to passengers,” he said.

“The new arrangement brings together the nation’s best tourism transport company with a globally recognised public transport company.”

Ellison will stay on as non-executive director of SeaLink after the deal is finalised.

According to a report in The Advertiser over the weekend, SeaLink is also in talks with the SA Tourism Commission and two councils about a proposal to run a ferry service from Glenelg Beach to Kangaroo Island.

SeaLink reported a record $208 million in sales and six per cent growth in underlying profit in its annual report in August, despite disappointing results across several of its divisions.

According to the report, the company’s underlying net profit after tax reached $23.4 million during the past financial year, up from $22.1 million the previous year, and total revenue was up 20 per cent from the previous year, to $251 million.

But earnings before interest and taxes (EBIT) made by its South Australian operations were down six per cent – a decline the company attributed mainly to a “challenging year” for Murray River paddle-wheeler, the PS Murray Princess.

SeaLink’s Western Australian and New South Wales division, Captain Cook Cruises, recorded a 3.3 per cent decline in sales revenue.

Underlying EBIT for SeaLink Queensland was down 8.6 per cent according to the report, but sales revenue for SeaLink Northern Territory jumped by 15 per cent – primarily due to the strong performance of its Tiwi Islands service.

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