Information of interest to operating railroad and transportation employees

For

For Friday, February 27, 1998

NEW YORK – Six months into the largest rail shipping breakdown in U.S. history, the Union Pacific Railroad is taking some extraordinary financial measures to try to solve its problems.

UP said it would raise funds for rebuilding part of its rail system by slashing its dividend in half (from 43 to 20 cents; about $230 million annually) and using as much as $1 billion in "equity-related" securities. The nation’s largest railroad also projected another quarterly loss.

The funds will be used to try to improve the UP’s infrastructure in Texas and the Gulf Coast. The announcement hammered UP stock, which lost 11% of its value in trading. On Thursday, UP said it expects an unspecified loss for the first quarter; it had a loss of $152 million in the fourth quarter.

In addition, Standard & Poor’s said it lowered UP’s commercial paper rating on UP. S&P also said it placed UP’s commercial paper on CreditWatch with negative implications.

Rail rates continue multi-year decline

WASHINGTON – The Surface Transportation Board (STB) said today that a study that measures trends in Class I railroad rates shows that they have continued their multi-year decline since enactment of the Staggers Rail Act of 1980.

The average, inflation-adjusted railroad rate declined by 46.4 percent from 1982 through 1996, and fell in each year during that period. Even without any adjustment for inflation, the nominal rail rate declined by 15.6 percent.

Republicans put author of "Derailed" on Amtrak panel

WASHINGTON – Joseph Vranich, author of a book critical of Amtrak, was placed on the newly created Amtrak Reform Council by Senate Majority Leader Trent Loss (R-Miss.).

Vranich has been on both sides of the rail issue. He worked to create Amtrak nearly 30 years ago, but in his book "Derailed" he exposes Amtrak’s failures. Vranich’s book argues against a quick Amtrak shutdown in favor of a carefully planned liquidation and development of substitute operators. He is critical of Amtrak’s soaring federal and state subsidies.

Amtrak Council members will evaluate the carrier’s cost and performance. If after December 2000 Amtrak fails to meet financial goals, then a restructuring or liquidation will be set in motion.

"Friends of Amtrak" is urging Amtrak supporters to write Sen. Lott to protest Vranich’s appointment.

MTA must mitigate night-time bus cuts

LOS ANGELES – The bus system in Los Angeles was ordered to ease the impact of late-night service cuts on transit-dependent bus riders. The Metropolitan Transit Agency (MTA) eliminated or reduced "night owl service" on more than a dozen lines to save $2 million annually.

The cuts set off protests in Los Angeles. This is the first time the court-appointed overseer has issued a formal ruling since the MTA signed a consent decree more than a year ago to settle a lawsuit accusing it of discriminating against poor and minority bus riders.

Amtrak considering additional Las Vegas service

LOS ANGELES – A news report says that Amtrak is "assessing another Los Angeles-to-Los Vegas service" although a final decision has not yet been made.

Amtrak has approved $9 million to improve its current LA to Las Vegas track.

In other news, Amtrak has cancelled all Dan Diegan rail service north of Los Angeles because of heavy rains and severe weather through at least March 2. Trains will continue between Los Angeles and San Diego.