Union Pacific's CEO Young says U.S. Congress discouraging rail investment
(Bloomberg News circulated the following story by Theo Keith on July 23, 2010.)
NEW YORK Union Pacific Corp.s chief executive officer said U.S. lawmakers are discouraging needed investment even as federal transit authorities call for $77.7 billion in rail- and bus-system improvements.
Congressional legislation now in committee would increase government oversight of mergers and allow shippers to challenge rates. The measures are making it hard for rail companies to plan, Chief Executive Officer Jim Young said yesterday in a telephone interview.
Im having a hard time seeing how those policies encourage new investment, Young said. In addition, he said the governments push for high-speed passenger rail service distracts from the more pressing concerns for freight.
Rail and bus systems nationwide need billions of dollars in improvements to reach good condition, the Federal Transit Administration said July 21 in a report.
Union Pacific, the largest U.S. railroad by 2009 revenue, said yesterday second-quarter net income jumped 53 percent to $711 million, or $1.40 a share, from $465 million, or 92 cents, a year earlier. The average estimate of 25 analysts surveyed by Bloomberg was a profit of $1.21 a share.
The company will invest $600 million in its rail infrastructure this year, Young said.
Union Pacific, based in Omaha, Nebraska, agreed July 20 to move forward on a high-speed rail line from Chicago to St. Louis after settling with the government on minimum terms, including recovery of its initial investment. Work is scheduled to begin in September.
Focus on Freight
If I had a choice, I wouldnt be doing this investment, he said. We need to focus on freight for our good and for the good of the country.
Union Pacific committed to the plan when it acquired Southern Pacific Railroad -- and the Illinois line -- in 1996, Young said.
The company was among the U.S. freight railroads that objected to May guidance from the Federal Railroad Administration that spelled out relationships between them and operators of high-speed passenger service on their tracks.
The Chicago-St. Louis route received $1.1 billion from last years $787 billion economic-stimulus package. Passenger trains will travel 110 miles an hour on the new line, Young said.
Union Pacifics sales rose 27 percent to $4.18 billion, led by a doubling of revenue from hauling automobiles from the second quarter of 2009. The increase in volume was expected because the auto industry was for all practical purposes shut down last year, Young said.
Union Pacific rose $3.28, or 4.8 percent, to $72.40 yesterday in New York Stock Exchange composite trading. The shares have gained 13 percent this year.
