BaltACDTheir troubles are the reasons they started maintenance shorting - no matter why a company starts shorting on maintenance it starts the company on a very slippery slope - a slope that can be next to impossible to get stopped on.
One of the mistakes made with the merger was it was not stressed the merger was a merger of equals so after the merger the former PRR and NYC management teams competed against each other for dominance in the merged company instead of melding together as one team. I think there was one faction that called themselves the red team and the other the green team or some such nonsense like that. CEO should have been all over that and put a stop to it but he did largely nothing and let it fester. That would never happen today precisely because PC is used as a merger example to avoid in most business schools or at least it used to be.........might have faded in usage since the 1970's.
You are correct about deferred maintenence due to losses on passenger service they did not have a lot of extra cash but I think had it not been for their other problems with management, accounting systems, infighting and being saddled with the NH, they might have pulled off the merger and succeeded.
The Corporate cultures were also like night and day. NYC was a bean counter organization with strict budgets and PRR was a lot looser with spending money. That was not the only difference mentioned though.
From what I recall, prior to the merger, the Pennsy was living off the dividends from the N&W, which they owned. The NYC was a much more up-to-date organization.
The merger was probably doomed from the get-go. All it did was take two (and then a third) failing companies to make one big failing company. The merger didn't, and couldn't, fix the root causes of the companies' slide. Namely, the loss of business (both freight and passenger) to other modes or the outright loss of customers to other areas of the country. The inability to change rates to hold or capture business, or the inability to abandon in a timely manner lines and services that were beyond salvage.
When the Government folded the Northeast bankrupts into Conrail, they changed the rules. Had Conrail been forced to service all the former bankrupt companies' routes and branches, had partial deregulation not happened, it too would have failed.
To be sure management problems didn't help and maybe hastened the fall. But without addressing and rectifying the underlying causes, eventual failure was assured.
Jeff
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