Brightline wants your business. Better yet, many of your repeat business.
The higher-speed rail line that whisks commuters among the cities of West Palm Beach, Boca Raton, Fort Lauderdale, Aventura and Miami — and longer-distance travelers from South Florida to Orlando — has been on a marketing tear this year installing a loyalty program for future trips, a revised frequently-rider pass program for commuters and a slew of bargain fares designed to get people to ride the rails during the holidays, vacations and entertainment events.
Management is also actively pursuing partnerships with cruise lines and airlines. It offers sales incentives to travel advisors, and most recently a 20% commission for long distance bookings through October. It all comes when the railway is acquiring new coaches to increase the length of the train, with the help of a $33 million federal grant.
But the Wall Street bond valuation agency looms in the background, wonders whether it is enough to produce the cash needed over time to sustain and grow the railroad business, which has been the model for like-minded projects across the country.
In a rapid succession this month, two of these institutions (Fitch Group and the Kroll Bond Rating Agency (KBRA)) have downgraded over $4 billion in Brightline bonds and memos. Another agency, S&P Global, did the same in late March with a memo of over $1.1 billion. Each included a “negative outlook” or “negative watch” notation in the report. A general concern born from financial analysts at all institutions focused on the long-term ability of the rail to generate enough cash to serve Brightline’s billions of dollars in debt.
Neither the company nor its analysts answered questions about their reporting. But their concerns can be eased quickly.
In a recently released April report for Brightline, management announced its affiliates of Brightline Trains Florida.
The company did not provide any further details. But more could happen on Thursday, when management implements the first revenue call to investors.
Not enough expectations
The Brightline was not a useful railway. In 2024, it recorded a net loss of nearly $550 million. This is due to refinancing and expansion of obligations and substantial operating losses. However, the company consistently reports monthly revenue and ridership increases compared to the previous year.
In April, riderships rose 9% year-on-year to 243,285, with long-distance travel to and from central Florida by 20%, and short-distance travel between cities in South Florida by 3%. Year-on-year revenues rose 15% in April to $16.8 million, with long-distance revenues rising 25% and short-distance results falling 21%.
The company said it is being encouraged by a 55% increase in travel by long-distance riders, but it expects it to “provide a reliable foundation for annual growth.” According to the report, the rewards program introduced in early April attracted 86,000 enrollments.
Previously reported monthly and year-over-year revenues and ridership earnings were not sufficient for bond rating agencies to conclude that Brightline had not reached their respective forecasts.
“Since the long-range segment reached commercial operation, slower than expected ramp-ups, caused primarily by capacity constraints on short-range riderships, have resulted in lower than expected short-range riderships due to existing long-range riderships in 2024,” KBRA said in a report on May 14th.
Fitch, which published a rating report on May 7, said the downgrade “reflects a weaker than expected, reduced project liquidity accounts, reduced operating costs, and unexpected, non-expected costs that previously did not result in a significant draw in the cash balance.”
Competing Travel Alternatives
The Fitch Report suggested that on the Brightline pitch, trains do not sell to the public to the public that they are powerful magnets for driving down cars in favour of rail travel.
“While Brightline is a positive comparison in terms of travel speed, comfort and reliability, competition between operation and existing low-cost railway alternatives could limit market acquisition,” the report states. “As a result, we expect the ramp-up will be relatively long for Brightline than for other new transportation development projects.”
The agency said the fares on the Orlando route are “higher than competing alternatives, especially to Orlando.”
“Actively, Brightline is profiting from the diversity of markets that are drawn from the Southern and Florida markets and targeting a mix of business and leisure travelers,” Fitch said. “Auxiliary services such as parking, concessions and corporate sponsorships provide diversification of revenue streams.”
Outlook
Will Brightline generate enough revenues to spend its reserves and make long-term profits?
The company did not respond to a list of email questions on the subject.
The rating agency provided positive positive bags and negative mixed bags to future companies.
“An increased preference for cleaner and more efficient travel modes could benefit Briderline Florida’s ridership, particularly when such preference changes are permanent,” writes KBRA. “However, given the high exposure to the economic cycle of the passenger rail industry, rides could be affected by economic slump, which leads to rising unemployment and lower disposable incomes.”
The agency provided props to the railway management group for its background and experience.
“The Brightline Florida management team is made up of experts with extensive experience in the transportation and hospitality industry,” writes Kbra. Additionally, the company’s construction management and operational teams come from a diverse background with experience in the country’s largest railway system, in addition to benefiting from Siemens Engineers (train manufacturers) 24/7. ”
S&P Global wrote that Brightline “cash flow could be positive” later this year. “If performance improves towards forecasting the base case. Specifically, we expect an increase in ticket revenue and reductions in non-repeated legal costs and other operating costs.”
Overall, Brightline remains the cutting edge model of the future of high-speed rail across the country, as it has different political support for projects in Texas, California and the Midwest.
Brightline West is NEV. and is currently under development by an affiliate of Brightline Holdings LLC as a 218-mile high-speed electric train link connecting Las Vegas, Nevada to Southern California. Earlier this year, investors won $2.5 billion in high-yield private-active bonds to help fund a $12.4 billion project with a $3 billion commitment from Washington.
Back in Florida, local and local debate continues as a proposal is being made to expand the Brightline from Orlando to Tampa. Fitch said the project will be funded by another Brightline entity.
In a 2023 interview with Sun Sentinel at a train stop in West Palm Beach, Tampa Mayor Jane Custer was leaning favorably towards the expansion of Brightline. At the time, she headed to a delegation of 50 private and public sector leaders who met with officials from Brightline in Miami, then boarded one of the company’s trains back north to Orlando.
More recently, the Hillsboro Transport Planning Organization has launched an ongoing investigation to measure public interest at Brightline Station in downtown Tampa.
The Washington, D.C.-based high-speed rail advocacy group remains optimistic about the long-term outlook for evolving regional projects across the United States
“The overall high-speed rail systems around the world are extremely profitable,” Andy Kunz, president and CEO of the High-speed rail association, said in an email. “And as our national network is taking shape, we expect the exact same thing to happen here.”
He refused to discuss Brightline’s finances.
Original issue: May 27, 2025 6:44am EDT
