Norfolk Southern Railway has announced disappointing financial results, and a cost-cutting plan that could eliminate two thousand jobs over the next four years.
Norfolk has assured shareholders that despite weak carload volume and tumbling intermodal traffic producing a double-digit profit loss, the railroad remains better on its own.
The company has outlined plans to cut staff, close routes and mothball locomotives amid a series of measures aimed at cutting annual costs by $650m by 2020.
The company revealed the plans after publishing fourth-quarter figures showing net income down 29 per cent year on year to $361m, following a 20 per cent slump in coal revenues.
Norfolk Southern's strategic plan is designed to reassure and bolster support among shareholders in the face of a possible proxy fight with Canadian Pacific.
The plan plays to the eastern railroad's strengths, increasing its on-time performance to service-sensitive customers in the automotive and consumer markets and continuing to woo business from trucking. The railroad also expects to capitalize on new business from an expanded Panama Canal.
NS has rejected the overtures from CP — whose biggest shareholder is Bill Ackman, the activist investor — by saying that regulators would bar a tie-up.
Meanwhile, West Virginia's congressional delegation and others are speaking out against Canadian Pacific's hostile takeover bid for the Norfolk Southern railroad because they fear job losses and harm to a Wayne County intermodal facility project that could be undercut just as it is getting started.