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October 2013

Rail News: People

Retirement dawns for Alaska Railroad leader, long-time industry contributor Christopher Aadnesen


By Jeff Stagl, Managing Editor

On Oct. 31, Christopher Aadnesen’s three-year reign as the Alaska Railroad Corp.’s (ARRC) top executive will come to an end. His more than 40-year railroading career will draw to a close, as well, at least in terms of day-to-day involvement.

Aadnesen, 64, is retiring as ARRC’s president and chief executive officer, a move that was expected to occur Sept. 21 when his three-year contract expired. Now extended through October after he signed a 45-day contract extension to help recruit his successor, Aadnesen’s retirement will be bittersweet.

He isn’t heading off into the sunset to play golf, travel, sail or catch up on his reading. Aadnesen and his wife plan to move to central Texas to help care for their 41-year-old daughter and three grandchildren. The daughter can’t work or drive after suffering a brain injury caused by a birth defect known as an arteriovenous malformation, an abnormal connection between arteries and veins.

The circumstances surrounding his departure from the railroad are trying, but Aadnesen believes he’s leaving ARRC in good stead. Under his watch, the railroad has made strides with train operations, scheduling, onboard services and other areas that helped forge “stupendous” passenger-rail service that’s “second to none,” he says. In addition, ARRC’s freight-rail arm has mostly been able to counteract lost coal and jet fuel business, and the railroad’s management staff is younger and better developed than when he signed on, Aadnesen believes.

“Before I arrived, career opportunities were slim,” he says. “I had to improve the cross-functional aspect of staff, and put people in roles they weren’t comfortable in before.”

Although he’s “retiring from running railroads,” as Aadnesen puts it, he expects to stay connected to the rail industry by acting as a consultant and again serving as chairman of Georgetown Rail Equipment Co., a position he held prior to joining ARRC.

Aadnesen has made a variety of industry connections — both in North America and abroad — over the past four decades. Prior to joining ARRC in September 2010, he led national freight-rail services for all seven Class Is at HNTB Corp.; was chairman and CEO of the Estonian Railways; founded Capitol City Group, an Austin, Texas, consulting firm that specialized in rail transportation and logistics services; served as chief operating officer and executive vice president at the Texas Mexican Railway Co. and TFM S.A. de C.V.; and spent 25 years at Union Pacific Railroad working in nearly every department involved with railroad management — human resources and labor relations among them.

Despite the quarter-century of service at UP, the “exciting part” of his long transportation career took place after he left the Class I in 1995, Aadnesen says. Through his Capitol City Group consulting firm, he helped Kansas City Southern and Grupo TMM S.A. de C.V. acquire the concession for Mexico's government-owned Northeast Railroad and privatize the railroad in 1996 and 1997.

Aadnesen helped finance the transaction through bond sales, earning a reputation in finance markets as someone with financial savvy and extensive railroad knowledge. Later, as EVP and COO of TFM and Tex-Mex, he tried to make TFM more efficient and update its information technology. Ultimately, the exercise was like taking 35 years of evolution in railroad practices and “compressing them into five years,” says Aadnesen. But the efforts bore results.

“I saw [TFM’s] operating ratio go from 1.06 to the high 70s by the time I left,” he says.

Foreign correspondent
In the early 2000s, Aadnesen had another chance to get involved with a foreign railroad and its finances. He became CEO of the Estonian Railways in 2003 to help private investors sell part of their ownership stake in Scandinavian and European financial markets, then had to deal with a newly elected government’s effort to renationalize the railroad.

The keys to optimally managing railroads overseas is to rely on best practices, incorporate the culture you’re in and form an understanding, says Aadnesen, adding that attempts to Americanize a foreign railroad don’t work.

“Not everyone can successfully run a company in a foreign country because there are social, economic and language barriers,” he says.

Now, he’s helping to find the next leader for a railroad that operates in what sometimes seems like a foreign land to people unfamiliar with Alaska and its “open frontier” appeal. [Editor's note: ARRC on Oct. 25 announced Chief Operating Officer Bill O'Leary had been promoted to president and CEO to succeed Aadnesen, effective Nov. 1. Born and raised in Fairbanks, O'Leary earned a bachelor's degree in accounting from the University of Alaska Fairbanks.]

A train operations expert isn’t an ideal CEO candidate because “there are different priorities than when I came onboard,” says Aadnesen.

His successor will need to be a lobbyist of sorts who can “protect” the railroad’s federal funding, he says. For example, a transportation bill proposed by the Senate last year would have reduced ARRC’s Federal Transit Administration formula funds by at least 75 percent and placed its passenger-rail service in jeopardy had it passed. In addition, the next leader will need to juggle state contributions and positive train control (PTC) funding.

“PTC is a huge expense for us, equivalent to one year’s revenue,” says Aadnesen.

The next top exec also will need to be a shrewd business person who can process everything the railroad does and control costs, he says.

“I believe finding a local person and promoting from within are important,” Aadnesen adds.

Railroads now are run by professionals who are more well versed in all departments, and engaged in what’s become a high-tech, high-profile and hugely successful rail industry, he says.

“The change in the make up of management has been for the better. Years ago, old engineering guys ran railroads with militaristic styles. It was like a hobby,” says Aadnesen.

The goal is to ensure the next “professional” to take ARRC’s reins isn’t anything remotely like that. An engrossed and in-tune leader would be apropos since Aadnesen believes those qualities were his hallmark.

“I’m pleased I was a hands-on chief executive who engaged people and helped develop career opportunities for people interested in the industry,” he says “I’m proud of that more personal involvement.”


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