UTU News Digest - Tuesday, October 27, 1998

UTU Daily News Digest

Information of interest to operating railroad and transportation employees

Tuesday, October 27, 1998

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Amtrak buying Mailvans to grow Mail & Express business

WASHINGTON -- Amtrak has announced that it will acquire 44 additional RoadRailer Mailvans, allowing for the continued growth of its Mail and Express business, which grew 19 percent in the last year to end the Fiscal Year 1998 at $83 million.

The Amtrak Board of Directors authorized the acquisition in support of a critical component of the corporation's recently approved Strategic Business Plan. Revenue from the Mail and Express business will help enable the railroad to achieve operating self-sufficiency by the end of 2002 and maintain a national system.

The RoadRailers, intermodal vehicles designed to operate on both trains and roadways, will be used to expand business with Amtrak's largest commercial customer, the United States Postal Service (USPS). Mail revenues have grown 10 percent annually. In addition, Amtrak's Express business has steadily grown in FY98, reaching a record high $1 million in monthly revenues in July, since the Surface Transportation Board's favorable decision in May 1998.

Amtrak Acting President and Chief Executive Officer, George D. Warrington said, "This growing commercial partnership will improve Amtrak's bottom-line, especially the financial performance of our long-distance train services, while providing an enhanced transportation service to the USPS."

Amtrak Intercity Vice President, Mail & Express, Ed Ellis said, "We're pleased the USPS has chosen to expand its relationship with Amtrak, and our objective is to continue to improve our reliability, speed and capacity on postal shipments."

By combining the speed of Amtrak passenger trains (operating at speeds up to 90 mph in this service) with the convenience of dock-to-dock shipping in the same trailer, Amtrak RoadRailer units provide fast transit times at competitive rates.

Amtrak operates a variety of equipment to meet the full range of expedited service requirements needed by its mail and express customers. In addition to RoadRailer units, Amtrak has an active fleet of 516 higher-speed mail and express cars, which are operated on Amtrak's national passenger train network. The additional RoadRailer units will raise the number of bi-modal vehicles in the Amtrak fleet to 335 units.

KCS put on credit watch by S&P

NEW YORK -- Standard & Poor's triple-'B'-minus senior unsecured and corporate credit ratings of Kansas City Southern Industries Inc. remain on CreditWatch with negative implications.

S&P said: "The CreditWatch listing is based upon Kansas City Southern's announcement in 1997 that it planned to separate its railroad and financial services businesses. On Oct. 20, 1998, Kansas City Southern announced that while it remains fully committed to the separation of its transportation and financial services businesses, it had withdrawn its request for a tax-free ruling from the IRS. A favorable ruling on the initial structure proposed to the IRS was not expected.

"However, Kansas City Southern indicated it will move ahead with the spin-off, once an alternative structure is developed that would receive a favorable tax ruling. Details regarding the form and timing of any transaction have not been disclosed.

"Most of the company's $900 million of debt is currently an obligation of Kansas City Southern Industries, the holding company for the railroad and financial service segments. About $300 million of this debt was incurred to fund an equity investment in a Mexican railroad privatization in 1997 and Kansas City Southern Industries remains subject to a potential $75 million capital call related to the Mexican railroad financing, although those operations are performing satisfactorily.

"While Kansas City Southern Industries' current ratings reflect diversity of cash flow from rail operations and well positioned financial services businesses, financial asset management currently accounts for the majority of consolidated operating profits."

Russian death toll rises to 24 in train-bus accident

MOSCOW – The death toll caused by an accident in Khabarovsk as a result of a collision of rail cars with a passenger bus rose to 24 last night.

The accident occurred at an unguarded railroad crossing on Monday evening. The rail cars ran into the bus at full speed, splitting the bus in half. Twenty-one passengers were instantly killed. The other 26 passengers, who were in the bus, including eight children aged from 11 to 14, were injured and three hospitalized people died.

Far Eastern Transport Prosecutor Valery Balyaba told Tass in Khabarovsk that the current task now is to establish the causes of this very serious accident. An investigation is to establish why several cars were disconnected from a freight train, which was at a standstill on the rail track near a base of a construction organization.