Less than a year after launching in Miami as Brightline, South Florida’s privately owned express rail service officially kicked off its planned rebranding Thursday as Virgin Trains USA.
Performing the honors: Virgin founder Sir Richard Branson himself. Branson unveiled a sign early Thursday morning at a media event re-christening downtown’s MiamiCentral station as Virgin MiamiCentral.
The ceremony was the first public collaboration between the two companies, a union that formally began in December, when Brightline filed a government document stating Virgin had taken a stake of up to 2 percent in the company. (The companies have declined to state Virgin’s exact holding). Although the downtown station has been renamed, the trains will continue to carry the Brightline yellow stripes until they are repainted with Virgin’s red logo. Virgin Trains USA, whose parent is Fortress Asset Management, will operate separately from Virgin Group.
Virgin Trains also announced Thursday it expects to soon file for a permit to begin construction of its planned expansion from West Palm Beach to Orlando. The company is still awaiting approval to issue $950 million in additional debt to fully complete the planned extension.
For Branson, the investment in Brightline is not an experiment, even though ridership has not hit preliminary targets and the company is operating in the red.
“We decided, ‘Everyone in America uses cars because the rail network is run by the government — and they have nothing like what we have in Europe,’” Branson said in an interview aboard the train during a Miami-West Palm Beach run Thursday morning.
It became clear, he said, that only a private company could make the necessary investments to create an express train that was also comfortable. Because Virgin Group already had a presence in Orlando and Miami through its Virgin Atlantic airlines and planned cruise line, Branson said, the routes Brightline was planning up the eastern coast of Florida to the Orlando area made sense. Virgin has operated trains in Britain since 1997.
“The vision of going from Disney all the way through to Miami and to the cruise ports, it just struck me as a no-brainer,” Branson said. “ I’ve sat in that traffic so I know what it’s like. ....People in America have not had the good fortune to experience good train travel for a while.”
Virgin Trains USA President Patrick Goddard said the company’s decision to pull back from an initial public offering planned for 2019 stemmed from weaker-than-expected public appetite and stronger-than-expected demand from private investors.
“We went out to market, and found we had a lot of interest from people wanting to invest privately versus publicly,” Goddard said. “The initial valuation wasn’t where wanted it to be, and we also went out right during one of worst pricing periods the markets had ever seen, and we didn’t want to undersell the company. So we raised the capital privately.”
Branson said the decision to forgo an IPO was the correct one — though he did not rule out doing so in the future.
“My instinct is that they were very fortunate in going the private route,” he said. “Being a public company — in the early days, it can be very tough, whereas this way you can get any issues sorted out...You just become a different animal.”
Virgin Trains USA continues to operate at a loss but is now projecting to earn a profit by the end of fiscal 2020. Last month, it also confirmed its intention to build stations at PortMiami, Fort Lauderdale-Hollywood International Airport and Disney World.
Branson also acknowledged concerns about safety spurred by deaths at crossings — at least 10 in 2018 and three to date in 2019. He characterized those fatalities as largely the result of suicides. He said the problem is even worse in his home country.
“The worst thing is the amount of people who commit suicide in Britain,” Branson said, referring to people who place themselves in the path of a running train. “It’s horrible for the driver.”
Goddard said whatever the causes, the incidents are ultimately something his company hopes to eliminate completely, to the extent that it can control them. Brightline / Virgin Trains has not been found at fault by a court in any of the incidents.
For now, Branson is preaching patience as the rail service continues to add new users. The cost of a ticket may seem high to some, he said, but once a traveler includes the cost of owning a car, the math breaks in Virgin’s favor, he said.
“If you have a big vision about something, you’ve just got to stick with it and prove people wrong and get it done.”