Railroad News

Canadian Pacific's second-quarter 2016 revenue fell 12 percent to $1.45 billion, operating income dropped 15 percent to $551 million and net income decreased 16 percent to $328 million (all in Canadian dollars) compared with the same period last year, the Class I announced this morning.

Reported diluted earnings per share declined 9 percent to $2.15 from $2.36 and adjusted diluted earnings per share decreased 16 percent to $2.05 from $2.45 due in large part to the 12 percent drop in revenue, CP officials said in a press release.

— by Pat Foran, editor

Class I second-quarter earnings announcements were two to three weeks away as we prepared to finish our July issue, but Class I execs already had let the world know that the year-over-year comparisons weren’t going to be good. They told us that in April during their Q1 earnings conferences and reminded us last month.

Canadian Pacific yesterday began laying off 500 track maintenance workers, the Teamsters Canada Rail Conference announced on its website.

The "temporary layoffs are the result of lower car volumes and a softening demand in a lackluster North American economy," said CP Assistant Vice President of Public Affairs and Communications Martin Cej in a prepared statement to CBC News, which the union also posted on its website.

Lac Megantic, Quebec, city officials have decided they will not pursue legal action against Canadian Pacific for the July 2013 crude-oil train disaster that killed 47 people.

The Lac Megantic city council voted Tuesday to drop all possible charges against the Class I, according to a press release posted on the city's website.

Canadian Pacific expects second-quarter revenue to decline about 12 percent compared with the same 2015 period, the railroad announced this morning.

The reasons: lower-than-anticipated volumes in bulk commodities such as grain and potash, the "unexpected and devastating wildfires" in northern Alberta and a strengthening Canadian dollar, CP officials said in a press release.

Canadian Pacific yesterday announced a reshuffling of leadership roles as part of a consolidation of the railroad's operating regions from three areas to two.

The changes, which went into effect yesterday, were made to prepare the executive team for Chief Executive Officer E. Hunter Harrison's retirement next year, said Keith Creel, president and chief operating officer.

“Thou hast seen nothing yet.” 

― Miguel de Cervantes Saavedra, Don Quixote

“Railways have a bright future, just not via M&A”
— Tony Hatch

Canadian Pacific this morning announced first-quarter 2016 net income rose 69 percent to $540 million from $320 million a year ago (in Canadian dollars), and its lowest ever first-quarter operating ratio, which came in at 58.9 percent.

CP reported diluted earnings per share increased 83 percent to $3.51 from $1.92, and adjusted diluted earnings per share grew 11 percent to $2.50 from $2.26 a year ago. Adjusted income rose 2 percent to $384 million from $375 million. Operating income rose 7 percent to $653 million from $612 million.

House Transportation and Infrastructure Committee Chairman Bill Shuster (R-Pa.) yesterday welcomed Canadian Pacific's decision to terminate its six-month attempt to merge with Norfolk Southern Corp.

CP officials announced yesterday that the company has ended its merger attempt and will withdraw its resolution calling for NS shareholders to vote in favor of negotiations between the companies.

Canadian Pacific announced today that it will end its attempt to merge with Norfolk Southern Corp., and will withdraw a resolution calling for NS shareholders to vote in favor of negotiations between the companies.

CP plans "no further financial offers or overtures to meet with the NS board" at this time, according to a CP press release.

Canadian Pacific yesterday released another in a series of white papers that try to make the case for a proposed takeover of Norfolk Southern Railway.

The white paper details how the "precision railroad philosophy" that CP has applied to elevate its status from "industry laggard to leader" would transform NS to create a leading North American transcontinental railroad, according to a CP press release.

Canadian Pacific yesterday filed with the U.S. Securities and Exchange Commission a shareholder resolution that will ask Norfolk Southern Corp.'s board to engage in "good faith discussions" regarding CP's proposed merger with NS.

CP also filed a letter that will be sent to NS shareholders in which the Canadian Class I describes what it believes would be the merger's value to shareholders.

Canadian Pacific Railway filed a preliminary proxy statement with the U.S. Securities and Exchange Commission that outlines the shareholder resolution that the railroad wants considered at Norfolk Southern Corp.'s upcoming annual meeting.

The resolution will ask shareholders to approve the resolution that would require the NS board to promptly engage in good faith discussions with CP regarding the Canadian railroad's merger proposal.

Canadian Pacific and the city of Vancouver, British Columbia, have agreed to terms for the railroad's sale of the Arbutus Corridor to the city for $55 million.

CP has been talking with city officials for many years about the corridor's future, said CP President and Chief Operating Officer Keith Creel in a press release.

Canadian Pacific is considering all of its legal options in response to major U.S. railroads that have publicly stated their opposition to its proposed takeover of Norfolk Southern Corp., CP announced Wednesday.

Other Class I railroads are working collectively to block CP's effort to "create a pro-customer, competition-enhancing combination" with NS, CP officials said in a prepared statement.

Canadian Pacific has petitioned the U.S. Surface Transportation Board (STB) for a declaratory order that would confirm the voting trust structure the railroad has proposed as part of its attempt to acquire Norfolk Southern Corp., CP officials announced yesterday.

The Class I filed the petition in response to CP and NS shareholder requests that the STB clarify its views on the voting trust model ahead of any formal application that CP would file, said CP Chief Executive Officer E. Hunter Harrison in a press release.

Canadian Pacific has received more than 80 letters from shippers in support of its proposed takeover of Norfolk Southern Corp., CP announced yesterday.

Sixty-two of the letters have been posted on the Surface Transportation Board (STB) website. The total number of letters to shippers in support of the proposed merger is now more than three for every one shipper letter in opposition, CP officials said in a prepared statement.

House Transportation and Infrastructure Committee Chairman Bill Shuster (R-Pa.) is leaning toward opposing a proposed merger between Canadian Pacific and Norfolk Southern Corp., a Pennsylvania newspaper reported this morning.

After touring Norfolk Southern Railway's Juniata Locomotive Shop in Altoona yesterday, Shuster said he was keeping an open mind but was currently leaning toward "no," the Altoona Mirror reported.

Canadian Pacific announced today it will ask the Surface Transportation Board (STB) to issue a declaratory order confirming the viability of a voting trust structure that the railroad has called for as part of its proposed takeover of Norfolk Southern Corp.

CP called on NS to assist "constructively in this effort," but will proceed regardless of its cooperation.

Canadian Pacific yesterday launched a new website that highlights what the Class I says would be the benefits of its proposed merger with Norfolk Southern Corp.

The website provides details of CP's proposal, along with details of its next steps in the effort to acquire NS, according to a CP press release.