UTU News Digest - Friday, July 23, 1999

UTU Daily News Digest

Information of interest to operating railroad and transportation employees

Friday, July 23, 1999

ILLINOIS: UP, CSX report 2nd quarter results

CHICAGO -- Two U.S. railroads posted profits on Thursday that met or exceeded Wall Street expectations, though disruption and rail traffic congestion from the June split of the former Conrail rail network held back earnings and revenues.

The nation's largest railroad, Union Pacific Corp. reported net income of $194 million, or 77 cents a share, returning from a net loss of $416 million, or $1.69, in the year-ago period.

The 1998 quarter's results reflected an estimated loss on the proposed sale of Union Pacific's Overnite Transportation trucking operations of $262 million, or $1.06 a share.

A consensus of analysts' estimates put Omaha, Neb.-based Union Pacific's earnings in the latest quarter at 72 cents a share, according to First Call, which tracks such data.

CSX Corp., which operates the third-largest U.S. railroad, reported net earnings of $114 million, or 53 cents a diluted share, compared with $151 million, or 70 cents, in the year-ago period.

Hit by the cost of splitting up the former Conrail system, CSX also said it would sell its Sea-Land Service Inc.'s international shipping business to U.S.-based A.P. Moeller-Maersk Line, owned by Danish-based A.P. Moeller, for $800 million in cash.

Slated to close in about four months, the deal was expected to generate $650-$700 million in net cash proceeds that CSX will use to pay down debt and sharply boost earnings and cash flow, CSX Chairman John Snow said.

The second-quarter earnings included an after-tax gain of $17 million, or 8 cents a share gain from the sale of its Grand Teton Lodge Co. to Vail Resorts Inc., and were in line with Wall Street's consensus estimate of 46 cents a share, according to analysts surveyed by First Call Corp.

Revenues at Union Pacific were trimmed by traffic congestion resulting from the June 1 split of Conrail's rail network between CSX and Norfolk Southern Corp., while CSX said the division hurt its quarterly earnings.

Union Pacific's second-quarter revenues rose to $2.77 billion from $2.62 billion in the year-ago quarter. Its chief executive said revenues were trimmed by traffic snarls in the East and a slowdown in coal production.

"We estimate revenue would have been about $40 million greater in the (second) quarter except for two things--the break up of Conrail in the East, and the shutdown of the Powder River Basin coal fields for 10 days in the month of June," Dick Davidson, Union Pacific's chairman and chief executive, said on a conference call with analysts.

Union Pacific hauls about half of the coal produced in the Powder River Basin each year. In 1998, Union Pacific hauled 119 million tons from the area, located in the Western United States.

CSX said its earnings were hit by its integration of Conrail's network.

"Not unexpectedly, we encountered some rough spots early in this highly complex undertaking, and expenses were higher as we fine-tuned our operating plan and information systems," John Snow, CSX chairman and chief executive officer, said in a statement.

Conrail, which held a monopoly on north-south traffic in the Northeast, was bought for $10.3 billion by CSX and Norfolk Southern two years ago.

CSX also said the integration of Conrail's operations was on track, and service was improving daily.

"Importantly, our plans are working, and we are concentrating now on bringing service on the acquired property to the level our customers expect," Snow said. "We should be well prepared for peak traffic demand in the fall."

Union Pacific's second-quarter improvement reflected a recovery from service problems that have plagued the railroad after it bought Southern Pacific Rail Corp. for $3.9 billion in 1996.

"We've come a long way from a year ago, but we are continuing our efforts to reduce costs and improve quality of service to satisfy our customers and shareholders," Union Pacific CEO Davidson said in a statement.

Shares of Union Pacific were off $1.44 at $56.50, while shares of CSX were off $1.56 at $48.38, both trading on the New York Stock Exchange.

IOWA: Buses popular in presidential race

PELLA -- Shoppers craned for a look as Gary Bauer's mammoth campaign bus drove slowly around the town square, a Sousa march blaring from speakers on top. A bit of excitement had just rolled into small-town Iowa, and that was the point. In a high-tech era of Web crawlers and jets, one trend in presidential politics is a reminder of an earlier era – the bus is back.

Faced with mind-numbing road trips, candidates are looking for creature comforts and ways of impressing backers, and the trusty bus is increasingly the answer.

Bauer is going that route, and Texas Gov. George W. Bush is a big fan. Vice President Al Gore is among the leaders in the field and publisher Steve Forbes is a convert.

There is a lot you can do on a bus.

"I want to make some money calls," Bauer said Tuesday. "It really drives the point home when you say `I'm out here in Iowa in a bus, heading to Pella.'"

While Bauer works the phone, wife, Carol, and daughter, Elyse, gather in captain's chairs and make plans to visit a bakery. Aides tinker with a coffee maker and make sure they wave to passing cars whose drivers honk when they see the campaign banner.

Forbes rolls along in a more high-tech operation featuring five telephone lines and a fax machine. Having trouble with cell phone coverage? Try the satellite phone.

In the early 1980s, the bus was a staple of the campaign trail, but candidates later turned to faster modes of transportation.

There were exceptions.

In 1988, Jesse Jackson headed a bus caravan to the Democratic National Convention. His was a very spartan affair in the days before cell phones and the Internet. Bill Clinton and Al Gore rolled out of the 1992 Democratic National Convention in a high-profile bus caravan. The bus, however, was not a prominent part of their primary campaign.

Among the latest group of presidential candidates, there is a pecking order for buses. Strapped for cash, former Tennessee Gov. Lamar Alexander rolls around in a modest recreational vehicle dubbed, perhaps hopefully, "Exceeding Expectations."

Bush, the Republican presidential front-runner who has broken fund-raising records, uses a tastefully appointed bus that can quickly be converted into a rolling television studio. A series of captain's chairs and couches are arranged nicely to accommodate a television crew, while couches in a back room make for an intimate setting for others.

Doffing his jacket, Bush roams from room to room munching on snacks and chatting with journalists. "Time to go to work," he declares as the bus pulls into yet another stop.

But not all buses are created equal. Reporters tagging along behind Bush have a fairly standard, garden-variety bus with a cooler as the biggest amenity.

Gore, the incumbent vice president, has by far the best communications gear, and aides working with a laptop computer brag they can post photos on the campaign's Web site before the bus arrives at the next event.

Gore aide Steve Hildebrand said they've turned to the bus because of simple logistics.

The vice president can get around the bubble of security surrounding him by making use of long bus rides.

"We'll put Al Gore on a bus with potential supporters and we'll go 45 minutes on one leg of a trip with potential backers, then bus them back home," said Hildebrand. "It's Al Gore on a bus with 25 or 30 people trying to convince them to support his campaign in a fairly intimate setting. We utilize every minute of his time when he's in the state."

The buses solve other problems. As next in the line of succession, Gore flies in a big Air Force plane with lots of aides along for the ride.

"In Al Gore's case, there are only so many airports in the state of Iowa where you can land Air Force II," said Hildebrand.

Bush has a similar logistical problem; there's a big press contingent tagging along and lots of aides, making for a multiple bus arrangement.

"It's the most practical way of getting around with the number of people traveling with the governor," said aide Eric Woolson, who confessed there's a bit of excitement generated when a noisy bus caravan shatters the tranquillity of small-town life.

"From an esthetic standpoint, it catches the eye when a bus pulls into a community like Waterloo or Webster City or Fort Dodge," said Woolson. "It catches peoples' eyes in a hurry and they want to see what's going on."

On the Forbes bus, small dishes of candy and nuts are tastefully replenished after every stop. The Republican candidate holds court at a full-size table, with local reporters shuffled in and out.

There's a fully stocked kitchen with deli sandwiches and munchies available at the drop of a hat. Even the most modest of buses feature televisions and microwaves, of course. Forbes' wife, Sabina, is along on one swing and there's a back room for some privacy for the family.

"It's just a more comfortable way to travel," said aide Bob Haus. "They can retire to the back while we get some work done up front." Bauer aide Marlys Popma says the bus also creates a sense of excitement.

"We get so serious and so intense sometimes. Sometimes getting on a bus and traveling around the state is a fun thing to do. People out there like to see the bus roll into town."

MISSOURI: TWA looks ahead after IAM ratifies pact

ST. LOUIS -- Negotiations with its largest union behind it, Trans World Airlines Inc. (TWA) President and Chief Executive William F. Compton said the company's focus is now on the future and turning a profit.

Speaking to reporters Thursday afternoon after it was announced that the International Association of Machinists ratified an 18-month agreement with TWA, Compton said he's pleased the two sides were able to come to terms. The contract takes effect Aug. 1.

The contract covers 16,000 employees including mechanics, flight attendants, baggage handlers and ticket agents.

Results of the voting were not released by the union and Compton said he did not know them. Neither side released specific details of the contract, although Compton said it does include wage increases for employees, some of which take effect Aug. 1.

TWA spokesman Jim Brown said after the news conference the contract includes double-digit wage increases, which will get employees to about 90% of the industry pay average by the time the contract runs out. In addition, 3 million shares of TWA's common stock will be distributed to employees during a three-year period.

TWA declined to comment on the cost of the agreement.

William O'Driscoll, president of International Association of Machinists District 142, was not immediately available for comment.

Compton said TWA has labor contracts with all four of its unions, with some contracts extending through 2002.

"So we can put aside the rancor associated with negotiating new contracts and focus on the future," he said. "I'm very optimistic about what we're going to accomplish at TWA."

Compton said he is optimistic that TWA will turn a profit, saying it wants to do so "as soon as possible." He said TWA has taken steps to do that, including expanding and modernizing its fleet and diversifying its route structure.

TWA hasn't posted an annual profit since 1988. On Wednesday it reported a second-quarter operating loss of 17 cents a share. It earned 28 cents a share for the year-ago period, before an extraordinary item. Analysts had expected a loss of 12 cents a share.

The company blamed the loss on higher-yield business travelers who opted to fly other airlines because of concerns over the labor negotiations.

In response to a reporter's question on whether paying for the contract depends on TWA turning a profit, Compton said he thinks the contract will help the airline achieve profitability.

Compton said TWA must move from just surviving to thriving. He said next month the airline will launch a strategic plan called Vision 2000 that will lay out what TWA wants to do in the intermediate and long term.

WASHINGTON: NTSB executive summary on June 18 railroad accident

WASHINGTON: About 4:31 a.m. central daylight time on June 18, 1998, a westbound

Northern Indiana Commuter Transportation District two-car passenger train struck the second semitrailer of a long combination vehicle that consisted of a tractor pulling two flatbed semitrailers loaded with steel coils at a highway-rail grade crossing near Portage, Indiana. When the vehicles collided, the second semitrailer broke away from the first semitrailer and was dragged by the front of the Northern Indiana Commuter Transportation District train, while the single chain securing the steel coil on the second semitrailer broke. The released steel coil, weighing about 19 tons, entered the train through the front bulkhead of the lead car and moved into the passenger compartment. Three fatalities and five minor injuries resulted from the accident. Damages were estimated to total $886,000.

The National Transportation Safety Board determines that the probable cause of the collision between Northern Indiana Commuter Transportation District train 102 and a long combination vehicle (truck) at the National Steel Corporation's Midwest Steel grade crossing was that the rear of the vehicle encroached upon the Northern Indiana Commuter Transportation District tracks while the vehicle was in the crossing storage area; this situation was allowed to occur because neither Federal, State, nor private agencies acted effectively to resolve safety problems permanently at the Midwest Steel grade crossing, which they knew to be hazardous.

The major safety issues addressed in this report are Safety at private grade crossings, Design of the Midwest Steel grade crossing, Conspicuity of the long combination vehicle semitrailer, and Crashworthiness of the Northern Indiana Commuter Transportation District railcars.

As a result of this accident investigation, the Safety Board makes safety recommendations to the U.S. Department of Transportation, the Federal Railroad Administration, the Federal Highway Administration, the Indiana Department of Transportation, the Northern Indiana Commuter Transportation District, the National Steel Corporation (Midwest Steel Division), and Norfolk Southern Corporation. The Safety Board also reiterates one safety recommendation to the U.S. Department of Transportation.

Conclusions/Findings

Neither the weather, the track, the mechanical condition of the train, the mechanical condition of the long combination vehicle, nor railroad operations caused or contributed to the collision.

The train engineer and conductor were qualified to perform their duties and showed no evidence of impairment from drugs, alcohol, or fatigue.

The emergency response was timely and effective.

If the train 102 engineer had detected the truck as soon as it became visible and immediately put the train into emergency braking, train102 could still not have been stopped in time to avoid the collision.

Despite vehicle overloading, logbook discrepancies, inadequate load securement, and the potential for impairment due to fatigue and marijuana use, these factors concerning the truck driver's actions did not contribute to the collision.

As currently configured, the Midwest Steel grade-crossing storage area cannot safely accommodate all vehicles that are allowed to use it.

The signal systems operating at the Midwest Steel grade crossing functioned as designed, and no signal operation failures caused or contributed to the accident.

The Midwest Steel grade-crossing signal system did not prevent vehicles from being trapped in the storage area between the Northern Indiana Commuter Transportation District and Consolidated Rail Corporation tracks.

The lack of clear delineation of oversight responsibility for the safety of the Midwest Steel private grade crossing undermined its safety.

The use of the Manual on Uniform Traffic Control Devices at private as well as public grade crossings may help ensure that certain hazardous conditions at private grade crossings receive appropriate attention before an accident occurs.

The current method of classifying grade crossings based solely on whether the roadway involved is publicly or privately owned does not provide a uniform level of safety at all grade crossings.

The current disparity in treatment between private and public grade crossings can place members of the public traveling on private grade crossings at increased risk.

An accurate evaluation of the accident risk at the Midwest Steel grade crossing could not be made using the current hazard index formula, because the formula does not reflect the presence of passenger trains and the prevalence of tractor-semitrailers using the crossing.

Had the Federal Railroad Administration grade-crossing closure program been more successful in eliminating grade crossings, fewer grade-crossing accidents might have occurred.

The train 102 engineer might have seen the long combination vehicle sooner and been able to stop the train in time to avoid the collision if the semitrailer involved had been equipped with retroreflective tape.

The structural elements of the Northern Indiana Commuter Transportation District railcar 11 collision post that failed were overwhelmed by the force of the collision, and the post could not have prevented penetration of the steel coil, given the train speed and the weight of the coil.

Under some circumstances, the full strength of the vertical inboard collision post welds may be necessary to protect passengers and crew.

Nippon Sharyo Ltd. did not employ sufficient quality assurance procedures during the welding of the collision post structures.

The failure of car 11's emergency electrical systems did not affect the evacuation and emergency response efforts following the Portage accident.

Probable Cause

The National Transportation Safety Board determines that the probable cause of the collision between Northern Indiana Commuter Transportation District train 102 and a long combination vehicle (truck) at the National Steel Corporation's Midwest Steel grade crossing was ineffective action by Federal, State, and private agencies to permanently resolve safety problems at the Midwest Steel grade crossing, which they knew to be a hazardous crossing.

Recommendations

As a result of this investigation, the National Transportation Safety Board makes the following safety recommendations:

To the U.S. Department of Transportation:

Eliminate any differentiations between private and public highway-rail grade crossings with regard to providing funding for, or requiring the implementation of, safety improvements. (I-99-XX)

To the Federal Railroad Administration:

Determine the extent of the weld quality assurance inadequacies demonstrated by Nippon Sharyo Ltd. in its collision post welds, and implement corrective action as necessary to ensure the strength of the collision posts. (R-99-XX)

Require 100-percent nonvisual inspection of all collision post attachment welds made on multiple-unit locomotives and passenger cars during manufacture, and require that inspection records be retained for the life of the car. (R-99-XX)

To the Federal Railroad Administration (R-99-XX):

To the Federal Highway Administration (H-99-XX):

To the Indiana Department of Transportation (H-99-XX):

To the National Steel Corporation, Midwest Steel Division (H-99-XX):

To the Norfolk Southern Corporation (R-99-XX):

To the Northern Indiana Commuter Transportation District (R-99-XX):

Work together to make, within 2 years, permanent engineering changes to the Midwest Steel highway-rail grade crossing that will minimize or eliminate all safety hazards at this crossing.

To the Northern Indiana Commuter Transportation District:

Inspect the collision post welds of all Nippon Sharyo Ltd. Railcars in your fleet and repair any welds that are deficient. (R-99-XX)

Also as a result of its investigation, the National Transportation Safety Board reiterates the following safety recommendation:

To the U.S. Department of Transportation:

Develop a standardized hazard index or a safety prediction formula that will include all variables proven by research or experience to be useful in evaluating highway-rail grade crossings, and require the States to use it. (H-98-33).

ENGLAND: Dutch look for private companies to run rail freight track

LONDON -- The Dutch government is looking for private companies to run Europe's first dedicated rail-freight track.

In a study released this week, the Dutch Transport Ministry asks for private bidders for contracts to market and operate the Bette Line, a double-track, 100-mile rail freight line linking the Port of Rotterdam with the German rail network.

The study calls for bidders with "a direct interest in freight transport by rail" to take on the job of defining, marketing and selling "freight paths" on the high-speed rail link once it opens for business in 2005.

The study also calls for private bidders to provide traction (locomotives), telecommunication, personnel management and other services on the new route, which will form part of the European rail network reserved for freight.

The successful bidder will define and sell user-friendly train paths that attract freight. That should "generate increased revenues for the operator, as a result of introducing user charges," the study says.

The private operator also will maintain the new rail line's track and other infrastructure.

Combining marketing and maintenance duties makes sense because increased use of the rail line will boost maintenance costs, the study says.

But, it says, "If the operation of rail-freight paths results in better use of the infrastructure, the infrastructure manager can collect more user charges."

The Netherlands currently has no legal provisions for licensing private companies to manage and operate rail freight lines. But this function "will receive a place in the regulations applying to the railway network," the study says.

The Netherlands is investing more than 9 billion guilders ($4.3 billion) in the new line. That includes funds for track and other infrastructure that can accommodate double-stack container trains.

The Betuwe Line has the support of European transportation officials in Brussels, who see it as a way to relieve land congestion around the Port of Rotterdam, Europe's largest container port.

Outgoing European Transport Commissioner Neil Kinnock has said the new line "will make a substantial contribution to the development of efficient rail freight operations in the EU" and should help to shift freight from road to rail.