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The track and equipment at Dunedin Railways Limited will spiral out of control, and 51 employees may lose their jobs due to the economic effects of Covid-19.
Photo: Dunedin Railways
The company, owned by Dunedin City Council, has been taking train tours since the late 1970s.
Its operations have increasingly focused on the tourism market, in particular the cruise season.
Dunedin Railways President Kevin Winders said mothballing was a way to preserve company assets, while exploring future options in what would be a very different tourism environment.
Dunedin City Council agreed to cover the current costs of the mothball operation.
“Unfortunately, the failure of the company will have an impact on staffing,” Winders said.
“Consultation with staff and the union has started today on proposals that would result in the loss of 51 jobs.
“We deeply regret the impact on our staff and their families. This is a very difficult time for them and we will work hard to do everything we can to care for them.”
Under the proposal, a four-person skeleton would prepare the company for hibernation and hold some assets.
The railway operated and maintained the Taieri Gorge railway, as well as other excursions.
The company struggled even before the Covid-19 outbreak.
“The impacts of Covid-19 exacerbate these challenges severely because the company relies heavily on international tourism, which accounts for 80 percent of DRL’s total number of passengers,” Winders said.
“We are unlikely to see the return of international visitors in the summer of 2020/21 and the outlook beyond that is uncertain at this time. With this outlook, it is simply not possible to keep the business operating normally.”
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Dunedin City Holdings Limited President Keith Cooper said he supported the decision.
“This option provides flexibility to explore new and sustainable tourism offerings based on DRL assets as the economy and tourism recover after Covid-19.”
This future evaluation work would be led by the railroads’ sister company, Dunedin Venues Management Ltd, given its experience in entertainment, marketing and tourism, Cooper said.
Future options would be reported to Dunedin City Holdings Ltd and Dunedin City Council later this year, who would then make decisions on initiatives and any proposed investments.
Cooper said it was too early to know what options might arise, but that the business and its products may look quite different in the future.
Dunedin Mayor Aaron Hawkins said the company’s skunk was the only realistic alternative to a total shutdown, but it was still a “heartbreaking result.”
“Under the proposal, several jobs would be lost, which is devastating for those affected and their families,” he said.
“It is also a significant blow to an iconic, long-standing tourist attraction. Dunedin Railways, and particularly the Taieri Gorge Railway, is well-liked by Dunedin and Otago’s broader community.”
Dunedin City Holdings Limited informed the board that continuing to operate Dunedin Railways would cost around $ 750,000 per quarter over the winter, with little hope of significant revenue for at least another 18 months.
The company was unable to maintain those costs and would quickly become insolvent without a significant contribution from its shareholders.
Hawkins said the board therefore agreed to financially back the company’s assets to allow exploration of new and sustainable tourism offerings, rather than seeing the business close entirely.
“The Council has requested that a report be submitted prior to the Long-Term Plan next year that presents future options for the operation of the railroad, including restarting the business. The DCC and DCHL will make decisions on initiatives and any proposed investments.” . Hawkins said.
Meanwhile, the council agreed to cover up to $ 1.05 million of the continuing costs of mothballing Dunedin Railways from June 30, 2020.
The costs included the retention of a small number of personnel and the storage and maintenance of key assets such as locomotives, wagons and vans.
