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Transurban Takes Step Towards Profitability With 495 Express Lanes

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The 495 Express Lanes got off to a slow start since opening in 2012, but Transurban says profitability is on the horizon.
Martin Di Caro/WAMU
The 495 Express Lanes got off to a slow start since opening in 2012, but Transurban says profitability is on the horizon.

After losing $51 million in its first full year of operations in 2013, the 495 Express Lanes — 14 miles of E-ZPass-only toll and HOV-3 lanes along the Beltway in Northern Virginia — are collecting enough toll revenue to cover their operating expenses as 2014 comes to a close, said the chief executive of the highway’s private sector operator, Australia-based Transurban.

While the express lanes’ customer base is expanding, Transurban may not make a profit on its long-term investment for several more years, said Transurban CEO Scott Charlton, in an interview with WAMU 88.5.

“We're at a point where we are more than covering our operating costs now and so we are happy with the investment that we restructured,” said Charlton, referring to the $1.1 billion of debt raised to fund the cost of construction of the 495 Express Lanes. “We look at it as a long-term investment. It is not a short-term investment.”

“We expect to be covering our operating costs and paying our debt, but from an accounting profit, that is going to be years off. But we expect to make distributions to our shareholders around 2020 or late this decade,” he added.

As the opening of Transurban’s other project in Northern Virginia — 95 Express Lanes between Fairfax and Stafford Counties — ignites a new discussion over how to defeat traffic congestion in the D.C. area, the company portends further revenue growth on the 495 corridor now that both toll roads form a 45-mile network of congestion-free lanes for drive-alone commuters, carpoolers, and buses.

Transurban, not the state of Virginia, is collecting all the toll revenue from both new highways because it fronted most of the capital to build the projects. The 95 Express Lanes cost $900 million ($100 million from the state); the 495 Express Lanes cost $1.9 billion ($400 million from the state).

Transurban’s figures show both traffic volume and toll revenues increased in each of the first three quarters this year compared to the same periods in 2013. More drivers are using the road and they are paying more expensive tolls.

Average daily trips for the quarter ending on Sept. 30 increased 14 percent compared to the same quarter in 2013. A weekday average of 43,170 trips was made, a 15 percent increase from the 37,574 average weekday trips in the September 2013 quarter.

Increasing traffic volume and the debt restructuring means the 495 Express Lanes should lose less money this year than last, but figures were not available.

“Transurban does not provide projections but we will send you the next quarterly report, which will contain data from the remainder of this calendar year, when it is available,” said Transurban spokesman Michael McGurk.

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