UTU News Digest - Thursday, February 3, 2000

UTU Daily News Digest

Information of interest to operating railroad and transportation employees

Thursday, February 3, 2000

WASHINGTON STATE: Cut in Washington funds may derail Amtrak service

SEATTLE -- Amtrak is threatening to derail passenger service in the Pacific Northwest Corridor unless the Washington Legislature follows through on its pledge to spend $109 million on train operations and track improvements, the Wall Street Journal reported.

Lawmakers made that appropriation in 1999, before Initiative 695. But now, the state Department of Transportation's revised budget for the biennium ending June 30, 2001, includes only $21 million for capital projects for rail, not the $77 million approved in the last session. If the Legislature doesn't restore the lost $56 million, Amtrak has told the department, the goal of full-fledged, high-speed service by 2018 won't be met.

"Failing to complete these capital projects would bring the program to a screeching halt and turn the clock backward," says Gil Mallery, president of Amtrak West, which oversees service in Oregon and Washington.

The DOT's post-I-695 spending plan does retain the $32 million lawmakers voted to contribute to Amtrak operations in this biennium. But even that could be in jeopardy in penny-pinching Olympia. I-695, which abolished the value-calculated motor-vehicle excise tax, has slashed state revenue for this fiscal year by $750 million.

"Is that $32 million in danger of not happening? Yes," says Sen. Mary Margaret Haugen, a Democrat from Camano Island and chairwoman of the Senate Transportation Committee.

There are other -- and in some people's minds far more critical -- transportation needs also wanting, including the state-run ferries, so pro-rail lawmakers may not be able to scrape together the money to continue subsidizing passenger trains.

"We're trying to save everything and not prioritize ... but it's difficult not to," says Rep. Ruth Fisher, a Democrat from Tacoma and co-chair of the Washington House Transportation Committee. "All of the agreements we have made with Amtrak over the years are in jeopardy."

Amtrak's Mr. Mallery says that without the operations subsidy from Washington, service in the corridor would be significantly downgraded. (Subsidies from Washington, Oregon and the federal government cover about 30% of the line's annual operating costs; the remainder is covered by sales of tickets and onboard concessions. Nationally, Amtrak receives federal funds of about $500 million annually.)

Specifically, Mr. Mallery says, service between Seattle and Vancouver would be eliminated, and Seattle-Portland daily round trips would be cut to two from the current four. "That will add congestion to what is already one of the most-congested areas of the country," he says.

Among the planned capital projects with significantly less funding in the new DOT budget are two that Amtrak views as crucial: track and crossing upgrades between Seattle and Tacoma -- on which the DOT proposes to spend nothing rather than the $35 million originally appropriated -- and construction of a maintenance complex, which the new budget finances at $2.3 million instead of $15 million.

Yet more is riding on the capital projects than expanded Amtrak service. The track and crossing upgrades are critical to speeding up freight rail service to the ports of Seattle and Tacoma, officials say. And without the improvements, Sound Transit won't be able to roll out its commuter service as planned in September, says Doug Sutherland, the agency's vice chairman.

According to Mr. Mallery, the maintenance project won't get off the ground if the state kicks in only $2.3 million. Amtrak workers would then just continue to check and repair cars and locomotives at a 97-year-old yard in Seattle.

"It may seem like everyone could get by without a new facility," says Mr. Mallery, "but we can't have people lying down in the mud trying to work on trains and still meet our goals."

The state is just one partner in the projects. The plan was to have $380 million in track and crossing improvements shouldered by the state, Amtrak, the ports of Seattle and Tacoma, Sound Transit, and Burlington Northern Santa Fe Corp. of Fort Worth and Union Pacific Corp. of Dallas, which own the tracks and rent them to Amtrak. The state's original contribution would have represented 31.6% of the total.

As for the $55 million maintenance facility, planned for a lot near Safeco Field in Seattle, Amtrak was to pitch in $30 million to get the project started, and the state another $10 million in the next biennium to complete it. Officials agree that the state's contribution is essential.

"You lose one partner," says DOT spokesman Stan Suchan, "you lose the whole project."

When Amtrak unveiled its 20-year plan for the Pacific Northwest Corridor in 1998, it promised gridlock-weary motorists more than a dozen sleek trains streaking each day between Eugene and Vancouver, British Columbia, by 2018. Travel time between Portland and Seattle would be reduced by one hour, to 2.5 hours.

The Washington Legislature was enthusiastic, in part because spiffier train service would encourage rail travel and take a load off Interstate 5.

But Fred Mannering, a civil-engineering professor at the University of Washington who analyzes traffic in the Puget Sound region, says that now, success for the Pacific Northwest Corridor is probably more important to Amtrak than to the region. Amtrak, he says, needs to increase service as quickly as possible to meet a congressional mandate to become operationally self-sufficient by 2003.

"Rolling out this service on time isn't nearly as important to solving congestion problems as it is to making Amtrak money," he says.

Rep. Fisher and Sen. Haugen both say rail supporters are committed to funding both operational and capital needs. Raiding the general fund is one option, says Sen. Haugen, and tapping Washington's $1 billion "rainy day" reserve is another. Legislators have been leery of dipping into that surplus, but Sen. Haugen says pressure to advance Amtrak's expansion might make that necessary.

But some don't like that idea. "To take money from the general fund to advance Amtrak is absolutely ludicrous," says Sen. Don Benton of Vancouver, the ranking Republican on the Senate Transportation Committee. "We've been wasting money on passenger rail for years. Voters said with I-695 that they don't want business as usual, and it's time to accept that and quit trying to save everything."

Amtrak's national board will review local projects when it meets in Seattle on April 26. If the Pacific Northwest route is viewed as in serious trouble, Mr. Suchan of the DOT frets, the board may just pull the money committed to facilitating expansion and spend it in other states.

Passenger rail advocates are clearly worried, and angry. "We were so pleased when strong steps were taken in years past toward alternate modes of transportation," says Aloha Wyse, an organizer for the 350-member Association of Oregon Rail and Transit Advocates in Portland. "But what's happening now is shocking and a disgrace."

Though Amtrak's future in Washington isn't clear, the Pacific Northwest Corridor is still held up as a national model. The route was the fastest-growing federally designated high-speed rail corridor in the nation last year, in terms of passenger use. A record 570,000 people rode the Cascades line last year, which Amtrak officials say diverted nearly 31 million miles of traffic from the region's highways.

"It's true that we've had great success so far," says Mr. Mallery. "But if the state starts disinvesting in its infrastructure, we won't be a success for long."

Off-Track Budgeting

Amtrak has signaled that its rail service throughout the region could suffer if the Washington Legislature pushes through its streamlined funding for operations and track improvements for 1999-2001.

Here's a look at the original budget and the bare-bones revision:

Original budget		Scaled-down revision
Operations	$32.1	$32.1
Capital:	76.8	20.9
New maintenance facility (Seattle)	15.0	2.3
Track improvements in Seattle-Tacoma	35.0	18.6
Additional train cars	3.0	nil

Source: Washington State Department of Transportation

WASHINGTON: KCSI posts record net despite railroad's slump

WASHINGTON -- Kansas City Southern Industries Inc., parent of Kansas City Southern Railway, reported record fourth-quarter earnings of $99.5 million, an 87% jump over $53.3 million a year earlier, the Journal of Commerce reported.

The transportation segment, which primarily is the railroad, reported lower earnings due to operating-margin pressures, but experienced an improvement in rail operations as congestion eased toward the end of the year.

KCSI's surge was fueled by Stilwell Financial Inc., the Kansas City, Mo.-based company's financial services segment, which registered a 116% increase in average assets under management quarter to quarter.

For the full year, KCSI's earnings increased more than 60% to $331.5 million from $207.1 million in 1998.

Fourth-quarter and full-year earnings include onetime, after-tax costs of $7.9 million for the transportation segment, reflecting, among other costs, facility closures, severance pay, labor, personal injury-related issues and $1.8 million in connection with the sale of a branch line.

Excluding those costs, the transportation segment reported earnings of $700,000 for the quarter, compared with $7.8 million in the comparable period a year earlier. The transportation segment includes KCSR, Gateway Western Railway Co. and equity investments in two Mexican companies -- Grupo Transportacion Ferroviaria Mexicana SA de CV (Grupo TFM) and Mexrail Inc.

Transportation revenue in the fourth quarter was virtually flat at $151.7 million, compared with $151.1 million in 1998. KCSR carloadings were up 3.6% quarter to quarter, but revenue declined slightly, reflecting changes in the mix of commodities traffic.

Higher coal, up 5%, and intermodal/automotive revenues, up 19%, were offset by volume-driven revenue declines in the chemical and agriculture products sectors.

Gateway Western, as well as other smaller transportation companies, experienced volume-driven increases in revenue. Fourth-quarter transportation operating expenses were approximately 5% higher than in the 1998 quarter, exclusive of 1999 one-time charges.

While KCSR system congestion eased during the fourth quarter, residual effects from previous months resulted in a 3% increase in operating expenses for the quarter.

WASHINGTON: Airline passengers give airlines an earful

WASHINGTON -- Airline passengers have a message: We will not go quietly from bad service on that last flight, the Associated Press reported.

In 1999, the number of complaints to the Transportation Department concerning the 10 major U.S. carriers more than doubled, ballooning to 13,709 from 5,808 in 1998. This increase occurred while the number of passengers on those carriers increased by about 16 million between 1998 and 1999 to 553.8 million, a growth of about 3 percent, the department said.

Complaints could include such things as scheduling, overbooking, fares, baggage and service.

The 10 airlines themselves reported more than 2.5 million complaints about lost or damaged luggage.

"The irritation level is just a lot higher,'' said David Stempler, president of the Air Travelers Association, a passenger advocacy group.

Stempler said years of increasing numbers of air travelers has led to full planes, stressed nerves and strained airline resources.

"We keep demanding of the airlines that they provide low fares, and one of the ways they do that is by tightening up the seat rows, by reducing the amount of food, by reducing the number of flight attendants. Then we complain about it,'' he said.

A major focus of traveler ire last year was America West, which had the highest rate of passenger complaints to the Transportation Department, nearly four for every 100,000 passengers. The average for all 10 major airlines was roughly 2 1/2 complaints for every 100,000 passengers.

Most of the America West complaints related to cancellations and delays, and if air travelers took attendance, the airline would be held after class for chronic tardiness. The Phoenix-based company had the poorest on-time arrival record of any major airline in 1999, with almost a third of its flights pulling up to terminal gates more than 15 minutes behind schedule.

TWA stood at the head of the class, with close to 81 percent of its flights delivering passengers on time, according to the Air Travel Consumer Report issued Wednesday. The Transportation Department report does not specify the reasons for flight delays, which might be caused by severe weather, air traffic control decisions, passenger problems or equipment failures.

The report showed that less than 70 percent of America West's flights arrived on time in 1999. The airline also had the most arrival delays in 1998.

America West spokeswoman Patty Nowack said she couldn't comment until reviewing the report.

Doing only slightly better than America West in terms of delays was Alaska Airlines, with 29 percent of its flights arriving late at the gate. U.S. Airways rounded out the bottom three with close to 29 percent of its flights being tardy.

In January, the Transportation Department's inspector general began accepting complaints from consumers concerned about airline overbooking and ticket prices.

Concerning reports of mishandled bags, United Airlines had the worst record, with 543,491 complaints.

Southwest Airlines had the lowest rate of complaints overall last year, with only 0.4 for every 100,000 air travelers. The airline also had the lowest percentage of reports concerning bags that were damaged, lost or delayed.

In 1998, Southwest had been the on-time arrival winner but slipped to No. 2 last year with an 80 percent on-time record.

Almost in a dead heat with Southwest, Northwest came in third for on-time arrivals, a big improvement for the airline that had ranked No. 9 in 1998.

The 10 air carriers were Alaska, America West, American, Continental, Delta, Northwest, Southwest, TWA, United and US Airways.

NORTH CAROLINA: Evacuees go home after derailment

BETHEL -- Hundreds of evacuees were back home yesterday after firefighters extinguished two rail cars that caught fire when a freight train carrying hazardous chemicals derailed, the Associated Press reported.

The two cars that caught fire did not contain hazardous materials, but about 15 homes near the derailment site remained under an evacuation order until midday Thursday, Pitt County spokesman Arlen Holt said today.

CSX planned to begin rebuilding the rail line through the swampy area today so rail cars can be brought in to transfer cargo from the derailed cars, he said.

Fifteen cars from the 38-car train left the track and tumbled into Grindle Creek on Tuesday morning, five miles east of this Pitt County community, said Adam Hollingsworth, a CSX spokesman in Jacksonville, Fla. The train had been traveling from Rocky Mount to Greenville. The derailment's cause was not immediately clear.

No injuries were reported, but dense smoke from the burning wreckage compelled officials to evacuate the sparsely populated area around the crash site. About 150 homes were affected by the initial evacuation order, which was lifted Tuesday night.

ILLINOIS: Teen boy struck by train in Chicago Ridge

CHICAGO: A teenage boy was struck by a freight train and critically injured Tuesday evening while walking across railroad tracks in Chicago Ridge, according to police in the southwest suburb, the Chicago Tribune reported.

The boy, whose name was not being released, was taken to Christ Hospital and Medical Center in Oak Lawn, where he was in critical condition shortly after his arrival, police said.

The boy was crossing the tracks in the 10200 block of South Ridgeland Avenue when he was struck by a westbound train around 7 p.m., said Deputy Chief Tim Baldermann of the Chicago Ridge Police Department. Baldermann said police believe it was an accident and that no foul play was involved.

Police were notified of the accident by the Indiana Harbor Belt railroad, which operates the freight train. The boy was taken to the hospital by a Chicago Ridge Fire Department ambulance, Baldermann said.

He said police warn residents, particularly teenagers, to cross tracks only at signaled crossings and never when signals are activated to warn of an oncoming train. He said it's easy for a person crossing the tracks to misjudge the speed of an oncoming train.

HUNGARY: Rail strike enters third day as talks continue

BUDAPEST --Hungary's rail strike entered its third day Thursday, as unionists and railway officials launched another round of talks, the Associated Press reported.

After spending 10 hours behind closed doors Wednesday, both sides expressed optimism that an agreement could be reached in the near future.

"In terms of a wage increase, we are now arguing about 1.5%," said Marton Kukely, the CEO of State Railways.

Kukely threatened the unions two days ago, saying said that each hour of the strike means four million forints ($16,000) less that can be used to improve wages, while the unions accused management of not negotiating in good faith.

Minimal services are being provided under the strike, but international passenger and freight trains - save for those carrying vital supplies - have been totally halted. Commuters complain of long journeys and long waits.

The three unions representing the 56,000 rail workers began an open-ended strike Tuesday to back demands for a new collective agreement and a 10.78% wage increase after previous warning strikes in December and January had failed to bring results.

ILLINOIS: Wisconsin Central Transportation reports fourth quarter earnings

ROSEMONT – Wisconsin Central Transportation Corporation (WCTC) yesterday reported net income for the fourth quarter ended December 31, 1999, of $18.3 million ($.36 per diluted common share), a company press release said. These results are a fourth quarter record and compare to $17.4 million ($.34 per diluted common share) in fourth quarter 1998.

The Company's North American operating income for fourth quarter 1999 was $25.5 million, approximately equal to last year's results. Operating revenues of $91.4 million set a fourth-quarter record, up nearly 6 percent from 1998 revenues of $86.3 million, reflecting increases in almost every commodity group.

"I am especially pleased with this performance," commented President and CEO Thomas F. Power, Jr., "given that our connecting business continues to suffer to some extent from industry service problems east of us."

Fourth quarter 1999 North American operating expenses were $65.9 million, up 8 percent from last year's $60.9 million, due to increases in labor-related and fuel expenses. The operating ratio (operating expenses as a percentage of operating revenues) was 72.1 percent versus 70.5 percent for the year-ago quarter.

The Company's fourth quarter 1999 results included equity in net income of affiliates of $5.7 million, a 30 percent increase from $4.4 million in the year-ago quarter. The contribution from English Welsh & Scottish Railway Holdings Limited (EWS) was $3.7 million in fourth quarter 1999 versus $3.0 million in the year-ago quarter. Operating revenues in the quarter increased 1 percent from a year ago while operating expenses decreased 2 percent.

The contribution from Tranz Rail Holdings Limited (Tranz Rail) was $1.9 million in fourth quarter 1999 versus $1.1 million in fourth quarter 1998. Operating revenues were up 5 percent, setting a new quarterly record, and reflect improving New Zealand and Asian economies.

For the year ended December 31, 1999, WCTC reported net income of $66.9 million ($1.30 per diluted common share) compared to $76.3 million ($1.49 per diluted common share) for the year-ago period.

Non-recurring items in both years affect comparability. North America's 1999 results were negatively impacted by a pretax personnel reorganization charge of $3.9 million, recorded in the third quarter, while its 1998 results were positively impacted by pretax income of $5.4 million related to the sale of rights under a transportation agreement. Without the 1999 charge and the 1998 credit, income before equity in net income of affiliates for 1999 and 1998 would have been $46.7 million and $45.8 million, respectively.

Total equity in net income of international affiliates for 1999 was $22.5 million compared to $27.2 million in 1998. "Although not yet at levels we want, contributions from affiliates have recently begun to show some improvement," said Power.