Arup settles $2.2b Airport Link claim
Bankrupted toll road Airport Link’s lenders will get some of their money back after international engineering and design group Arup agreed to settle a $2.2 billion lawsuit alleging it made misleading and deceptive traffic forecasts.
The settlement, which has not been disclosed but is believed to be more than $100 million was negotiated after the engineering and design group’s former lead traffic forecaster, Gerard Cavanagh, acknowledged under cross-examination in the Federal Court that the traffic models devised for Airport Link were “totally and utterly absurd” and that some of its forecasts were “simply ridiculous”.
The 6.7-kilometre Airport Link tunnel, which links Brisbane Airport with the CBD, went into receivership in early 2013 – just seven months after opening – after traffic was two-thirds lower than Arup predicted.
PPB Advisory, Airport Link’s receivers, decided to settle the lawsuit despite the acknowledgements from Mr Cavanagh, because a $2.2 billion judgment against the engineering group would have forced it into bankruptcy, making it hard to recover any cash for lenders. Arup’s Australian revenues are around $350 million annually.
The trial contained extraordinary revelations over the methods used by Arup to develop traffic forecasts. Arup took data from a travel survey that included a 1200-kilometre plane trip from Melbourne to Brisbane to help forecast how many cars would use Airport Link. It also assumed drivers would think the toll road was cheaper than free roads because motorists paid tolls electronically.
Arup and PPB Advisory have signed settlement papers but will not finalise the settlement until Arup pays, with the parties planning to return to court on December 14 to finalise proceedings.