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In a major Dunedin City Council asset sale yesterday, Citibus was offloaded to an Invercargill-based company which already operates buses in Dunedin.
The council announced a "conditional agreement" to sell the assets and business of Citibus late yesterday, but few details of the sale itself were revealed.
Invercargill Passenger Transport Ltd director Tony Baas declined to comment last night when asked about the sale, and Citibus and Dunedin City Holdings Ltd (DCHL) chairman Paul Hudson would not give further details until staff had been fully informed.
But the news appears good for employees of Citibus, which is owned by the council through its holding company, DCHL.
Citibus driver and New Zealand Tramways Union Dunedin branch president Bill Simpson said last night employees had been told they would keep their jobs under the same terms and conditions.
"The guys can relax a little bit."
But Dunedin South Labour MP Clare Curran criticised the sale yesterday, saying public transport was a public service, not a profit-making venture, and she would believe the promises given the drivers when she saw them.
The sale follows weeks of rumour and, more recently, concern among Citibus employees about their future.
Late last month, the council had a non-public meeting to discuss "Dunedin City Holdings Ltd matters", a meeting that was later revealed to have been a discussion about the sale of Citibus.
On Friday, 65 drivers were given a letter saying the company wanted to change the terms and conditions of their employment.
Then yesterday afternoon, the council sent a press release announcing the conditional agreement.
It said Invercargill Passenger Transport Ltd, which trades in Dunedin as Dunedin Passenger Transport, was a long-established bus transport operator in the South Island.
"Both parties have undertaken to do their best to satisfy the conditions within the contract and work towards a seamless transition that will have no impact on the regular users of bus services in Dunedin."
It was anticipated settlement of the contract could occur before June 30, offers of employment would be made to all existing staff, and buses would operate current timetables on existing routes as normal.
The press release said as a matter of overall strategic direction, board members were of the view they could achieve a greater return by withdrawing an investment from Citibus and placing it within the other businesses of their group.
Dunedin Mayor Dave Cull said DCHL had raised the idea of selling the company that was "haemorrhaging money", and the council had voted to endorse that.
He would not release the price paid, as the deal was still being completed.
Cr Hudson said last night the companies were still in a confidential negotiating situation.
Asked what would happen to the $4.05 million the company owed the council at the end of last year, Cr Hudson said debt - and interest - were "a normal part of running a company".
Citibus recorded before-tax losses of $806,000 in the past two years.
Ms Curran said the only way a private company would be able to make money would be to raise prices for customers or cut costs.
"In this environment, anything that costs people jobs is a real problem."
Mr Cull responded last night people needed to differentiate between the ownership of a bus operation and supervising a public transport system.
The Otago Regional Council ran the public transport system, not the city council.
Just because Citibus lost money did not mean there was a benefit to the travelling public.
Other companies ran the same service with the same fares as Citibus.