UTU News Digest - Wednesday, July 14, 1999

UTU Daily News Digest

Information of interest to operating railroad and transportation employees

Wednesday, July 14, 1999

Journal of Commerce: Ronald J. Conway taking the throttle at CSX Transportation

CSX Corp. Wednesday announced that Ronald J. Conway is taking over as president of CSX Transportation Inc. to succeed A.R. "Pete" Carpenter, who will become vice chairman of the holding company.

Conway, 55, joined CSX last year from Conrail Inc. after the joint acquisition of that railroad by CSX and Norfolk Southern Corp.

He takes over amid reports of progress in overcoming delays, congestion and operational problems on CSX that arose after the division of Conrail on June 1.

Conway, a 30-year industry veteran, was executive vice president of operations at CSXT, the same title that he had held at Conrail.

John W. Snow described Conway as "a dynamic, results-driven leader."

Snow also said that Conway "is reshaping our operations into a new model, bringing decision-making closer to the customer and aimed at lowering the operating ratio substantially through improved customer service, higher productivity and keen attention to costs."

Conway said, "This is the opportunity of a lifetime. It's an exciting time for our company."

Carpenter, 57, has been president of CSXT since 1992 when the company dissolved its three-unit operating structure and put one person in charge of the entire rail operation. Prior to becoming CSXT's president, he headed two of the company's three operating units.

Carpenter's rail career began in 1962 as a brakeman.

CSX also announced formation of an office of the chairman that will include Snow, Carpenter and three other senior CSX executives. Other members of the chairman's office are Mark Aron, executive vice president and general counsel, Andrew Fogarty, senior vice president of corporate services and Paul R. Goodwin, executive vice president and chief financial officer.

In a statement, CSX said the moves had been long planned.

Snow said Carpenter's "crowning achievement has been leading our effort to combine Conrail's operations into the CSXT network and building a strong foundation for a new era of railroad growth and profitability."

Conway was the most senior Conrail executive to join CSXT as the acquisition was being reviewed by the Surface Transportation Board. Several other former Conrail vice presidents also joined CSX ranks. Among them was Les Passa, who now is president of CSX Intermodal.

By JOC’s Rip Watson

Norfolk Southern Second Quarter EPS Will Fall Below Analysts' Consensus

NORFOLK, Va. -- Norfolk Southern Corporation today announced that its earnings per share for the second quarter of 1999 likely will be in the range of 18 cents to 22 cents.

This reflects pressures on revenues and higher-than-anticipated expenses related to the integration of the Conrail properties being operated by Norfolk Southern's railroad subsidiary. As previously disclosed, the higher expenses include labor costs, equipment rents and service alteration costs to meet the immediate needs of shippers.

Norfolk Southern does not forecast earnings or other results, and this announcement does not signal a change in its policy. Norfolk Southern will report earnings and other results at its regular meeting with analysts in New York City on July 28.

"The Corporation's preliminary calculation of its second-quarter earnings was completed earlier today. Because of the exceptionally wide variance between the consensus estimates and our preliminary calculation, we believe it is in the best interests of the broad constituencies interested in the Conrail transaction to make this information available now," said Chairman, President and Chief Executive Officer David R. Goode.

"While we are encouraged by improvements in our service to customers and in our railway operations, integration-related pressures on railway operating revenues and higher operating expenses are likely to continue at least through the third quarter," Goode added.

"As we have repeatedly said, we will do what is required to realize the benefits of this transaction for our customers and our stockholders.

"We regard these integration expenses as investments in the service opportunities and long-term operating advantages of our expanded rail network, " Goode said.

Parsons Transportation Group to Take Long Island Railroad Into Grand Central Terminal

NEW YORK -- MTA Long Island Rail Road (LIRR) selected Parsons Transportation Group Inc. (Parsons), New York City, as its Systems Engineering Consultant (SEC) for the East Side Access project.

In its long-term objective to better serve rail passengers in the area, MTA is taking a major step in integrating the historic rail service territories of Manhattan. The East Side Access project, with construction estimated at $3.2 billion, is already underway and, by 2009, will give LIRR passengers direct access to Grand Central Terminal, in addition to LIRR's existing Penn Station terminus.

As SEC, Parsons Transportation Group's responsibilities will include integrating a state-of-the-art train control design with existing systems for the nation's busiest commuter railroad. Parsons Transportation Group received Notice to Proceed on July 6, 1999.

Robert S. O'Neil, president of Parsons Transportation Group, said: "East Side Access is one of the most ambitious transportation projects in New York City since the days of Robert Moses. We are extremely proud to be part of the MTA team."

LIRR trains will access Grand Central Terminal from Queens via the nearly completed 63rd Street Tunnel under the East River. Under the $103 million SEC contract, Parsons will provide systemwide planning and final design for the railroad's track, power, signal, and communication systems from Sunnyside Yard in Queens to Grand Central Terminal in Manhattan, including interlocking improvement to support operations at LIRR's Harold and proposed new interlocking facilities.

Parsons Transportation Group will also be responsible for design of the new LIRR station within Grand Central Terminal, modifications to NYC Transit's Lexington Avenue IRT Station, and operational improvements and support facilities at Sunnyside Yard.

Having successfully managed the award-winning Washington Metrorail system as the General Engineering Consultant, Parsons Transportation Group is recognized as a world leader in rail engineering. The 106-mile Metrorail program was recently designated by the International Tunneling Association as the most outstanding underground planning, design, and construction achievement in the United States during the last 25 years.

Parsons Transportation Group is a global business unit of the Parsons Corp. It is founded on the outstanding accomplishments of its core engineering firms of DeLeuw Cather, Steinman, and Barton-Aschman.

NYRR's Cross Harbor Railroad Instant Beneficiary of NS/CSX Entrance

NEW YORK -- New York Regional Rail's (NYRR) President W. Robert Bentley announced this morning that, even in these initial days of operation, both Norfolk Southern Railway and CSX Transportation, have shown every indication that they wish to move significant levels of rail freight, via NYRR's Cross Harbor Railroad.

The Cross Harbor Railroad is recognized as the single provider of cross-harbor rail-freight marine transportation, linking New York with the rest of the National Rail-Freight Network.

"After some initial operational and computer wrinkles were ironed-out, I am pleased to report that, just six weeks into this new operation, the Cross Harbor is handling tangible increases in rail-car traffic flowing through the Railroad's system," said Bentley.

"The introduction of competitive rail-freight service to this area has served as an immediate market stimulus to the region. We continue to be in negotiation with both railroads in an effort to conclude mutually beneficial transportation contracts that will benefit all railroads involved. These transportation contracts will provide growing customer bases with cost-effective and reliable freight transportation for the first time in a generation. I expect that many of these contractual agreements will come to fruition in the very near future," he continued.

"Since the June 1st Start Date, we have experienced growth in virtually all sectors of our rail-business. Also transport of cocoa now accounts for in excess of 65% of the Nation's consumption. As a result of this continued progress, I expect the Railroad to achieve positive cash-flow by the end of this quarter," he concluded.

Bentley also reported that the Company is working to try to mediate a settlement with both Norfolk Southern and CSX, who assumed responsibility for the Conrail lawsuit as a result of their acquisition of Conrail.

New York Regional Rail Corporation is the operator of the New York Cross Harbor Railroad, which now connects with both Norfolk Southern Railway and CSX Transportation in Northern New Jersey, via the Oak Island Interchange and NYCH's Greenville Yards.

IRS Provides Favorable Ruling on Separation

KANSAS CITY, Mo.-- Kansas City Southern Industries, Inc., yesterday announced that the Internal Revenue Service has issued a favorable ruling on the company's anticipated "tax-free" spin-off of its financial services companies.

Janus Capital Corporation, Berger Associates Inc., Nelson Money Managers PLC and KCSI's 32% ownership of DST Systems, Inc. have been contributed to a new holding company, "Stilwell Financial, Inc." which is the company that is to be separated from KCSI. It is contemplated that Stilwell Financial, Inc. will be listed on the NYSE and, at about the time of the separation, will begin trading under the symbol "SV".

KCSI anticipates the spin-off will occur during the fourth quarter of 1999. Following the transaction, KCSI will continue to own and operate its rail transportation companies, trading under the symbol of "KSU".

Task force formed to consider Portland to Boise rail route

WASHINGTON -- A task force will consider the possibility of restoring Amtrak passenger rail service from Portland to Boise, Idaho, Amtrak said yesterday.

The 18-member task force will be headed by Sens. Ron Wyden, D-Ore., and Mike Crapo, R-Idaho, who have been advocating rail service along the 491-mile route.

The task force includes community, business and travel industry leaders from both states. The group will hold its first meeting July 23 in Ontario.

"We are pleased to work with this task force to produce a cost-effective, practical plan for providing rail service to communities in eastern Oregon and Idaho," Amtrak West President Gil Mallery said in a statement from his Oakland, Calif., office.

Under an agreement with the federal government, Amtrak must wean itself from federal operating subsidies by 2003. Mallery said he hopes any Portland-to-Boise plan adopted by the task force "is consistent with this obligation."

Amtrak's former Northwest route, the Chicago-to-Seattle Pioneer, had dwindled to three-day-a-week service in Oregon when Amtrak ended the run because of a budget cut in May 1997. The Pioneer's end left a large part of Oregon east of the Cascade Mountains with no mass transit service, except for buses.

Of the cities along the Pioneer's Oregon route, only Pendleton has an airport served by a commercial airline.

Wyden said the subject of restoring Amtrak service often came up at his town meetings in Eastern Oregon.

"It's time to make sure that rural Oregonians who pay with their tax dollars to support a national rail system have quality rail service available to them," he said yesterday.

Wyden and Crapo held town meetings on the Amtrak issue last month in Hermiston and Boise.

More than 100 people attended the Boise meeting, where citizens -- many of them elderly -- called for restoration of service.

Crapo said in a statement yesterday that he looks forward to developing a plan that meets residents' needs and "identifies funding resources that would make the service viable."

Other key topics the task force expects to address include the type of service to provide, operating costs, ridership and revenue estimates and capital needed for track infrastructure.

MTA says fare strike having little impact

LOS ANGELES--The Bus Riders Union launched its first general fare strike Monday against the Metropolitan Transportation Authority by urging passengers on a few routes not to pay this week in protest of the agency's plans for an increase.

MTA spokesman Marc Littman said the first day of the protest had "virtually no impact on our service," other than scattered reports of organizers briefly boarding buses at a few locations.

Littman said it could not be determined if there was any impact on MTA revenues until the fare boxes aboard the buses can be emptied and counted.

The fare strike is the latest in a series of actions by the Bus Riders Union to draw attention to the state of the nation's second-largest bus system. The group is locked in a federal court fight with the MTA over compliance with a 1996 consent decree requiring reductions in overcrowding and improvements in bus service.

A spokeswoman for the group, Kikanza Ramsey, said teams of organizers boarded some buses during the morning and afternoon commutes to urge riders to refuse to pay the fare or show their monthly passes. "The fare increase is the proverbial slap in the face to bus riders," she said. "People continue to be outraged at the level of service."

The MTA is proposing to increase the basic cash fare by a dime to $1.45, the price of discount tokens by a nickel to 95 cents, and the price of the monthly pass by $3 to $45.

If the MTA board approves the fare increase--the first in more than four years--the cost of weekly and semimonthly passes and discount passes for senior citizens, students and the disabled would increase Nov. 1.

Ramsey said the fare strike is just beginning. "There are half a million bus riders out there. We will keep going and keep growing it. It does take an amount of time to spread the word."