All aboard: Restructuring firm called in on Queensland airport rail service

A downturn in tourism has hit the Airtrain service in Brisbane. Picture: Jesse Smith

Insolvency, advisory and restructuring firm McGrathNicol is understood to have been called in to provide advice on Airtrain — the Queensland rail service that transports passengers between the Gold Coast and Brisbane Airport — in a further sign of the pressure facing tourism-related companies linked to the global pandemic.

Airtrain is owned by Universities Superannuation Scheme, a pension fund based in the United Kingdom.

The business was said to be struggling last year when the majority of domestic and international flights were cancelled in and out of the state due to COVID-19.

Working on the Airtrain asset is McGrathNicol partner Jamie Harris, say sources.

Airtrain said in a statement that it had no external debt and confirmed the appointment of McGrathNicol in May.

The company said it had received a cash injection from USS and that its revenues fell dramatically from March last year in line with air travel volumes through Brisbane airport.

Airtrain chief executive Chris Basche said he was positive about Airtrain’s long term prospects.

“What we need is the continued supportfo the government to ensure our tourism industry picks up quickly so people can experience our great rail system for themselves,” he said.

The privately owned and operated railway started operations in May 2001 and is integrated into the Queensland Rail suburban network, with trains running from Brisbane Airport directly to Brisbane City and on to the Gold Coast.

It has an alliance with Broadspectrum, which provides operations and maintenance on the Airtrain rail link.

Universities Superannuation Scheme purchased the asset in 2012 for $US115m, acquiring Airtrain Holdings Limited, which runs the airport rail link.

At that time, more than 1.75 million people were said to use the rail line to commute from the airport terminal to Brisbane and the Gold Coast. Passengers can connect by rail to the wider network spreading into Queensland, including major tourist hubs such as the Gold Coast and Sunshine Coast.

About 10 years ago, Airtrain was making $6.6m in earnings before accounting for interest, tax, depreciation and amortisation.

At the time of that deal, Rothschild and King & Wood Mallesons advised Airtrain, while USS was advised by CP2 Limited and Johnson, Winter & Slattery.

The pension fund also has investments in Sydney’s Airport Link and Melbourne’s ConnectEast.

One market expert said that the rail business could have strong earnings prospects over the long term following the opening of a new runway at Brisbane airport.

It comes at a time when Queensland Premier Annastacia Palaszczuk has taken a hard line on border closures to others states amid the COVID-19 pandemic and has faced strong criticism surrounding those restrictions over the past year.

Queenslanders re-elected the Labor government last year amid a political campaign that played out while the heightened COVID-19-related restrictions surrounding travel into the state remained in place.

Queensland workers exposed to the tourism industry who have been hard hit by the pandemic-related border closures remain on JobKeeper payment subsidies from the federal government.

Market experts say that as well as tourism operators, hotel owners and operators on the Gold Coast are also coming under increasing financial pressure, although some of their offshore owners have more problematic assets overseas that are capturing their attention due to COVID-19.