American Railroads Excel

With one noteable exception

Led by Canadian Pacific, North American railroads have improved their already respectable performance. CP, bouyed by the strong economy both in Canada and south of the border, improved revenues in the fourth quarter of 1997 by 14% to a record C$668 million and operating expenses fell by $40 million. The operating ratio (the percentage of revenues that goes into operating the railway) was 78,4%. Financial turmoil in Asia marrs the outlook for 1998, but a low Canadian dollar, coupled with a strong economy in Canada and the USA, should offset this.

CP's collegue and competitor Canadian National, improved revenues by nine per cent in the year ending Dec 31st. Operating expenses rose by five per cent. CN's operating ratio was 81,5% for the year, and in the last quarter, the operating ratio dipped below 80% for the first time in the railway's history.

"The year 1997 marked a new phase in CN's evolution as a shareholder-owned company," said CEO Paul Tellier. "The company began to focus successfully on profitable revenue growth, improved utilization of assets and continued cost containment. This three-pronged strategy will guide CN in future."

Norfolk Southern's operating revenue increased 4% in the last quarter of 1997, compared to the same quarter in 1996. NS considerably outshines the Canadian railways with its record operating ratio of 70,4% for the fourth quarter. If NS can avoid doing whatever Union Pacific did, performance should improve after swallowing its half of Conrail.

Which brings us to CSX, where operating income increased 4% to $1,58 billion.

"We are looking forward to stronger performance in 1998, with growth and higher returns at all our businesses as we prepare to integrate Conrail and improve our competitive position in our core business,'' said chairman and CEO John W. Snow.

Burlington Northern Santa Fé, the merged company, increased operating revenue by 6% in 1997, to $1,9 billion. BNSF's operating ratio improved to 75.9 per cent for the fourth quarter 1997.

And Union Pacific. We've written quite a lot about UP in this space. UP had an operating loss of $57 million in the fourth quarter of 1997, compared to operating income of $470 million for the same period in 1996. The operating ratio was 102.5 in the fourth quarter, compared to 81.6 in the fourth quarter of 1996.