Paul_D_North_Jr billio I absolutely agree. Herewith three (3) line segmets to sell off immediately: 1) Detroit-Kansas City. Too much highway competition to allow compensatory rates, especially on auto traffic. 2) Cincinnati-Atlanta. Runs too close to coal country so why not scrap this sucker? 3) Chicago-North Jersey. Hey, why not exit NS's entire Northeast network, but keep the former D&H? That oughta just do it. 1) Ex-Wabash ? 2) CNO&TP ? 3) Ex-PRR ?
billio I absolutely agree. Herewith three (3) line segmets to sell off immediately: 1) Detroit-Kansas City. Too much highway competition to allow compensatory rates, especially on auto traffic. 2) Cincinnati-Atlanta. Runs too close to coal country so why not scrap this sucker? 3) Chicago-North Jersey. Hey, why not exit NS's entire Northeast network, but keep the former D&H? That oughta just do it.
1) Detroit-Kansas City. Too much highway competition to allow compensatory rates, especially on auto traffic.
2) Cincinnati-Atlanta. Runs too close to coal country so why not scrap this sucker?
3) Chicago-North Jersey. Hey, why not exit NS's entire Northeast network, but keep the former D&H? That oughta just do it.
1) Ex-Wabash ?
2) CNO&TP ?
3) Ex-PRR ?
Why not?
[Seriously, it would make better economic sense to buy NS, then sell off/scrap CP, but this would be lost on the initial poster]
This will be a highly leveraged transaction. Basically, CP will borrow about $10 billion to pay the holders of the 305,000,000 Norfolk Southern shares roughly $33 one time, and then give them an approximate "half share" of stock equal to the value of the NS share they already own.
CP's outstanding long term debt at 3rd Quarter 2015 was about $8.7 billion, and NS's was about $8.9 billion, so the combined company will have about $27.6 billion of debt and about $16 billion in revenue. If they procured that debt at a weighted average of 5% the annual interest expense will be about $1.4 billion, or equal to the CP net income for 2014. In theory that leaves the NS net income as the net income for the new company.
As a comparison, UP has outstanding long term debt as of Third Quarter 2015 of about $12.8 billion on revenues that look to be in the $22 billion range this year and are on pace to earn approximately $5 billion in net income on an operating ration that will be in the 60-61-62 range for the year. Their interest expense last year was $561 million - it should be similar this year - a much smaller hit on higher revenue.
It will be interesting to see how this plays out. Norfolk Southern needs to go on offense, borrow some money to buy KCS and expand their traffic base and operating range (some lucrative chemical and refinery traffic there, plus imports and exports from Mexico all the way to Boston on a single carrier) and make themselves more difficult to acquire in the process of building their franchise.
Andrew FalconerThat is very telling about how the top people at CP view the NS.
NS = Negotiable Securities?
Larry Resident Microferroequinologist (at least at my house) Everyone goes home; Safety begins with you My Opinion. Standard Disclaimers Apply. No Expiration Date Come ride the rails with me! There's one thing about humility - the moment you think you've got it, you've lost it...
billioI absolutely agree. Herewith three (3) line segmets to sell off immediately: 1) Detroit-Kansas City. Too much highway competition to allow compensatory rates, especially on auto traffic. 2) Cincinnati-Atlanta. Runs too close to coal country so why not scrap this sucker? 3) Chicago-North Jersey. Hey, why not exit NS's entire Northeast network, but keep the former D&H? That oughta just do it.
Bill Ackman, Pershing Square Capital Management:“Here we have proven management, and in the case of [NS president] Jim Squires, Jim is not a proven railroad operating executive. … It’s a real leap of faith to assume that all of a sudden, beginning a week or so after the CP offer, that the company now has a plan to get to a 65 [percent operating ratio].“What’s interesting about Norfolk Southern is vast ownership of real estate in some of the most valuable real estate markets in the world, the Northeast, and certain parts of the south.”
That is very telling about how the top people at CP view the NS.
Watch my videos on-line at https://www.youtube.com/user/AndrewNeilFalconer
Seconding NorthWest's opinion. For the last several decades, CP's pattern of route and track abandonment has paralleled that of the industry as a whole.
The line to which the OP presumably refers, the Arbutus spur in Vancouver, has had no traffic for at least 15 years. The line runs through one of the toniest and most expensive residential neighbourhoods in Canada, and given Vancouver's booming residential real estate market, it is little surprise that CP wants to sell the land.
Move along folks--nothing to see here.
Andrew FalconerThey are attempting to do that with the CP lines in Vancouver, British Columbia.
FWIW, the Arbutus Corridor hasn't seen revenue service since the mid '90s, and CP has had problems with encroachment on the ROW by neighboring homeowners as they try to sell the line to the city (last I heard, they still hadn't settled on a price). Ever since industry left False Creek and the line was cut off from the waterfront, it has had little reason for being.
Andrew Falconer The Norfolk Southern rail lines will be removed for scrap value and the land will become real estate holdings if Harrison's CP takes over. They are attempting to do that with the CP lines in Vancouver, British Columbia. They could expand the rail removal and the real estate renting and sales with the Norfolk Southern.
The Norfolk Southern rail lines will be removed for scrap value and the land will become real estate holdings if Harrison's CP takes over.
They are attempting to do that with the CP lines in Vancouver, British Columbia.
They could expand the rail removal and the real estate renting and sales with the Norfolk Southern.
Andrew Falconer The Norfolk Southern rail lines will be removed for scrap value and the land will become real estate holdings if Harrison's CP takes over... They could expand the rail removal and the real estate renting and sales with the Norfolk Southern.
The Norfolk Southern rail lines will be removed for scrap value and the land will become real estate holdings if Harrison's CP takes over...
I absolutely agree. Herewith three (3) line segmets to sell off immediately:
Norm48327 Andrew Falconer "NS will continue to evaluate the closure of additional yards and terminals. It may close or mothball up to 1,000 miles of lower-density routes in order to concentrate traffic on higher-volume lines, which will reduce maintenance and operating costs."
Andrew Falconer "NS will continue to evaluate the closure of additional yards and terminals. It may close or mothball up to 1,000 miles of lower-density routes in order to concentrate traffic on higher-volume lines, which will reduce maintenance and operating costs."
I don't know what Andrew Falconer is trying for here except to stir up artificial excitement. First he says, "The NS rail lines will be removed for scrap value," then (in a later post), "(NS) may close or mothball up to 1,000 miles of lower-density routes."
Big difference. If it's the latter, it might be justifiable based on economic activity, or lack thereof. Lots of other railroads have done the same thing. Although I'd like to know how Falconer knows about NS plans.
If he thinks CP would decommission NS, with which it has few if any duplicative lines, leaving CSX stand-alone in huge swaths of the country, he is simply nuts.
Interesting that Falconer's latest posts should appear at the same time the subject of trolls came up elsewhere on here.
Andrew Falconer ... Have you seen how little of the old Soo Line remains? ...
...
Have you seen how little of the old Soo Line remains?
Most of the Soo Line's abandonments and spin-offs happened a generation before EHH came to CP.
Andrew Falconer "NS will continue to evaluate the closure of additional yards and terminals. It may close or mothball up to 1,000 miles of lower-density routes in order to concentrate traffic on higher-volume lines, which will reduce maintenance and operating costs." That is what James Squires plans on doing. Have you seen how little of the old Soo Line remains? CP will cut the rail lines as far as possible. They are not sentimental about old routes.
"NS will continue to evaluate the closure of additional yards and terminals. It may close or mothball up to 1,000 miles of lower-density routes in order to concentrate traffic on higher-volume lines, which will reduce maintenance and operating costs."
That is what James Squires plans on doing.
CP will cut the rail lines as far as possible.
They are not sentimental about old routes.
They're not supposed to be "sentimental". They're supposed to be hard nose, no nonsense business people. If a rail line has lost its economic justification, and there is no foreseeable prospect for its return to economic usefulness, get rid of it. Now.
Investent capital is a scarce resource. It should never be wasted. Don't leave it tied up in a rail line that has outlived its economic usefulness.
And let the market decide the best use for that capital. The government doesn't make such decisions at all well.
Andrew Falconer"NS will continue to evaluate the closure of additional yards and terminals. It may close or mothball up to 1,000 miles of lower-density routes in order to concentrate traffic on higher-volume lines, which will reduce maintenance and operating costs."
And those lines are likely to be in coal country.
Norm
There are many good reasons to oppose a takeover of NSC by CP and more to find EHH's methods distasteful. But exaggerated and contrived information or slander as some do on these forums is not helpful.
C&NW, CA&E, MILW, CGW and IC fan
Short lines and branches are a different proposition. EHH said that probably some under-utilized yards and spurs could be sold off. However, to spend what NSC would ultimately cost just for the real estate and scrap iron would be a big loss. No one would do that.
That is the new trend in rail line acquisitions in the past 5 years.
Buy another railroad and take up the tracks of most of it.
Go back and take a look at how many abandonments and sales of rail lines that have already been owned by Class i railroads and regionals.
This would be even more of the same.
Andrew,
Are you making this up? Is it just what you think? OR, do you actually have some facts to back it up?
Andrew FalconerThe Norfolk Southern rail lines will be removed for scrap value and the land will become real estate holdings if Harrison's CP takes over.
You have a source for that information? Kinda hard to move freight without rails.
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