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RAIL EMPLOYMENT



Rail News Home Canadian Pacific

3/22/2011



Rail News: Canadian Pacific

Severe weather to rain down on CP's earnings; arbitration ruling to drive up NS' expenses


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Two Class Is are anticipating negative impacts on their first-quarter financial statements because of severe weather, fuel costs or litigation.

Canadian Pacific officials expect first-quarter earnings to take a hit due to the “severity and length of winter events on our operations combined with the lag in fuel recoveries,” they said in a prepared statement. Diluted earnings per share likely will decline by 40 cents compared with first-quarter 2010 to a range between 12 and 22 cents.

"Since the new year, multiple severe weather events have caused significant disruptions to train operations across our network. Slower train speeds have reduced productivity and asset velocity, thereby constraining network capacity and limiting our ability to meet market demands,” said CP President and Chief Executive Officer Fred Green. “With moderating weather, CP is seeing fluidity return to the network and our operating metrics are showing improvement. Our two- to four-year target of delivering a low 70s operating ratio remains unchanged.”

Meanwhile, Norfolk Southern Railway received an “unfavorable” ruling from an arbitration panel regarding an insurance claim associated with the January 2005 derailment in Graniteville, S.C., NS officials said in a statement. The Class I likely will be responsible for some of the insurance carrier’s legal costs associated with the arbitration proceeding, although the exact expenses haven’t been determined, they said.  
 
As a result, the railroad will record a $43 million first-quarter expense for receivables associated with contested portion of the claim, as well as expenses of about $15 million for other receivables that might be affected by the decision.

"It is not probable that these amounts will be recovered,” NS officials said.


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