Hunter Harrison at CSX

[Gilbert B Norman]

The Wall Street Journal reports today that "Yäger" will be leaving CP to join with an Ackman "alumnus" in an activist investor fund. CSX is a potential "target":

http://www.wsj.com/articles/outgoing-ca ... 1484783110" onclick="window.open(this.href);return false;

Fair Use:

..Hunter Harrison, the railroad veteran who announced his early departure from Canadian Pacific Railway Ltd. Wednesday, is joining with an activist investor in an attempt to shake up management at rival railroad CSX Corp.

Mr. Harrison, 72 years old, said he is completing an agreement to team up with Paul Hilal, who left William Ackman’s Pershing Square Capital Management LP to launch his own fund last year. They are expected to try to put Mr. Harrison in a senior management position at CSX, which CP approached about buying last year and in 2014, according to people familiar with the matter .

I'm reminded of long time New York Yankees sportscaster, Mel Allen, and his favorit expression; "How do you like that".

[Noel Weaver]

I sure hope this happens, maybe he can straighten out CSX and make it a decent railroad again.
Noel Weaver

[Gilbert B Norman]

The story has "legs":

Wall Street Journal:

http://www.wsj.com/articles/csx-investo ... 1484842700" onclick="window.open(this.href);return false;

Fair Use:

Hunter Harrison has spent several years trying to assemble a transcontinental railroad empire. This week the 72-year-old maverick set aside that pursuit but not his desire to run one of America’s biggest railroads.

Mr. Harrison abruptly left his job Wednesday as chief executive of Canadian Pacific Railway Ltd., leaving behind $89 million in compensation, to team up with activist investor Paul Hilal to shake up management at U.S. rival CSX Corp., according to people familiar with the matter.

Investors cheered the notion, sending shares of CSX up 23% Thursday to an all-time high of $45.51, giving the company a market value of nearly $41 billion. The stock has doubled over the past year

Associated Press:

http://bigstory.ap.org/article/6ec5b07b ... x-railroad" onclick="window.open(this.href);return false;

Fair Use:

The executive who led the financial turnaround of Canadian Pacific railroad over the past five years is teaming up with an activist investor to target CSX railroad.

Shares of CSX Corp., based in Jacksonville, Florida, jumped more than 20 percent to sell for $44.90 in afternoon trading Thursday.

Hunter Harrison announced his retirement from CP Wednesday, and then told The Wall Street Journal about his plans. Harrison is reportedly working with investor Paul Hilal, who left Pershing Square last year to start his own hedge fund, which the paper reported has raised more than $1 billion for a single investment

disclaimer: no longer needed: long position CSX is now a bond. It's called "portfolio rebalance".

[ccutler]

Not sure he would be good for CSX. His tenure at CP was not that great. He was slimming capacity just before the oil rush created huge bottlenecks. Many shippers complained about CP cutting service as well. And the Pershing Square activist crowd did a bad job with the NS effort, losing tons of investors' money in that effort.

I am skeptical of modern activists' efforts at attacking railroad management. The activists are using these attacks as a way to attract less-informed institutional investors to invest in their hedge funds, and I don't see it as a legitimate effort to create long-term value. Running trains over Christmas like airlines run flights over Christmas? Doesn't Bill Ackman know the difference between a passenger and a container of electronics? And, by the way, if it's still in transit on Christmas Day, guess what...it's too late!

Chris

[RailraoderS]

This hit the news the last couple days.. this man gave up 118 million at age 72 from his Canadian RR to jump over here to CSX.... why would he do this??

CP surprised investors Wednesday evening with the announcement that the Memphis-born Mr. Harrison has severed “substantially all” financial ties to the company, giving up pension, benefits and stock worth $118-million. Mr. Harrison will lose the chief executive title on Jan. 31, and will be on vacation until then, the company said.

This man appears, by everything I have been reading, to be all about his Investors.. doesn't give a **** about the workers.. his "'skill set" is about slashing employees and destroying the morale of those left to do double the work... he was the highest paid CEO in Canada 2012... and to read what his employees thought of him, been reading comments down below some of the articles...it's deplorable...

[Gilbert B Norman]

If I read this Journal article correctly, looks like "Yäger" at the CSX throttle is a done deal:

http://www.wsj.com/articles/csx-rail-ve ... 1485735855" onclick="window.open(this.href);return false;

Fair Use:

...According to people familiar with his plans, Mr. Harrison sees an opportunity to cut costs and improve profit at CSX by applying his so-called precision-railroading strategy, which emphasizes staff reductions, tighter train schedules and route shifts.

A vocal advocate for building a transcontinental railroad in America, Mr. Harrison views CSX’s rail routes and large terminal near Chicago as valuable assets, these people say. Delays and backlogs are a common problem for railroads routed through the Chicago area

Gottaluv that "buzz-line" - precision-railroading.

[CPF363]

Wonder if Harrison, if in fact he becomes the CEO at CSX, would consider selling parts of CSX's Chicago rail routes and terminal trackage to CP plus their line to Detroit so they can fix their big gap in their system effectively giving CP their own line from Windsor, Ontario to the Soo Line?

[Noel Weaver]

I think everything in Massachusetts and Connecticut might well end up being sold off to one of the smaller railroads in this area, maybe the G&W.
Noel Weaver

[ccutler]

Noel, yes, that would be good, and hopefully all operations east of the Hudson

Then P&W [as a division of G&W] can run more than gravel trains from NYC to the Northeast. Paper, Poland Springs directly from Maine to the Bronx?

Chris

[F-line to Dudley via Park]

Not that there's very much of that left. Cedar Hill, the insignificant New Haven-Milford gaggle of small customers, and the (two?) remaining customers between Bronx and Stratford are it. It wouldn't exactly be much of a swing in power if the NHV-STR customers were shoved off onto the P&W Danbury local. But I can't see them giving full power over Cedar Hill to somebody else when the Conrail-era paper barriering of CSOR has worked out pretty well for them at keeping Connecticut traffic completely under their thumb while somebody else operates it. And I can't see the stone trains getting completely untied for P&W interchanging anything/everything with NY&A. The conditions for shaving off Cedar Hill would probably be templated on the same: CSOR running the yard and doing CSX's bidding under the same exclusive leash. There's not really any advantage to them outright scraping it all off into a free-for-all open bid. And definitely nothing they have motivation to change re: P&W to NYC.

Not when either of those moves gives NS a potential vector for turning their extremely limited current access to CH and zero NYC/LI access into potentially something much larger and more strategic (either for themselves or via deal-making with a proxy road). See also CN looming out-of-view with the NECR+P&W Canadian Gateway. That new alliance gets a whole lot more interesting if it takes only one proxy to give CN a vector into NYC from their perch at the Canadian border. CSX would be doubleplus unlikely to unshackle the stone trains with a third Class I now sniffing around New England looking for haulage penetration all the way down to the coast.

[ccutler]

There's a price for everything. If Harrison wants to run trains like airplanes, he won't care about loose carload shipments from Cedar Hill Yard/CT and may sell them for a price.
What happened to that branch line east of Bridgeport? There are still a number of beverage distributors that might want to use freight if the pricing and service are right.

[Backshophoss]

Believe PAR/PAS has the freight rights on the Waterbury Branch of MN to a siding near Devon Jct for MN's Ballast Cars.
Might become NS if PAS gets bought out by NS.

Figure on HH selling off CSX real estate assets from the get go.

[F-line to Dudley via Park]

There's a price for everything. If Harrison wants to run trains like airplanes, he won't care about loose carload shipments from Cedar Hill Yard/CT and may sell them for a price.
What happened to that branch line east of Bridgeport? There are still a number of beverage distributors that might want to use freight if the pricing and service are right.

Stratford Industrial Track? Down to one customer--Ring's End--on the first 1500 ft. of track. Everything else down to the industrial park is long gone. That glorified siding off Stratford Ave. is the only thing they have left off-main in the whole state of CT. Danbury Branch is P&W's, Waterbury Branch is split P&W south of Derby Jct., Pan Am Southern north of Derby Jct. Belle Dock Industrial Track is P&W's. And New Caanan Branch has been freight-extinct for 3 decades.

[doepack]

Wonder if Harrison, if in fact he becomes the CEO at CSX, would consider selling parts of CSX's Chicago rail routes and terminal trackage to CP plus their line to Detroit so they can fix their big gap in their system effectively giving CP their own line from Windsor, Ontario to the Soo Line?

Despite the presence of one classification yard (Barr) and two intermodal terminals at 59th St. and Bedford Park (with the latter adjacent to the Belt Railway of Chicago's main yard at Clearing), CSX otherwise maintains a fairly small footprint in the Chicago area proper. Anything that doesn't end up at one of those three terminals winds up heading north either on the Blue Island sub or along the co-owned segment of the Indiana Harbor Belt, both of which are in a north-south alignment (in the case of IHB it's more NW-SE). The Blue Island sub is a slower, secondary route used primarily for transfers or bulk traffic, while everything else runs via the joint line with IHB.

The north end of the Blue Island sub links to a dormant, mothballed line called the Altenheim sub, which runs west through the city toward a connection with CN, along a segment that was once owned by Soo. Toward the western end, CSX switches its one and only customer, the Ferrara Pan candy company, but the remaining 6 mile portion between the Blue Island connection and Ferrara Pan hasn't seen a train in almost a decade, though it's not officially abandoned. However, CP could potentially be quite interested in the Altenheim, because it would provide another route to it's main Bensenville yard west of the city. Theoretically, trains would get off NS's Chicago Line at CP509 (aka Rock Island Jct.), run west to Forest Hill jct., where it would pick up the Blue Island sub for the run north to the Altenheim, then west to Bensenville. Of course, this assumes CP can get trackage rights on the Blue Island sub if CSX decides to hang on to it.

Currently, incoming CP freights to Benseville follow the NS-CP509 route, but continue west on to Clearing for crew changes before heading north on the Belt Railway to Bensenville up to Cragin Jct, then hangs a left, and uses Metra's Elgin sub for the final leg west. Except for CN, Clearing is used to varying degrees for interchange by the other four class one roads, and things can get backed up sometimes as one might imagine, which could make the Altenheim sub a more attractive alternative. You'd eventually abolish the Clearing crew changes, and get out of Metra's way in the meantime. But, the $64,000 question: Would CP be willing to spend the many millions of dollars this route would need in terms of upgrades? Not just track, ties, ballast, and signals, but rehabbing the in-city bridges? And not to mention purchasing the ex-Soo segment at the far western end of the line that's currently owned by CN. Hard to say, but with all the talk still tentative, this looks like a good place to cease speculation.

Aside from the one online customer, I don't see the Altenheim having any strategic value to CSX, but we'll have to wait to see whether or not Harrison's prospective new management team is of a like mind, assuming a takeover does indeed occur...

[Gilbert B Norman]

From Holiday Inn Express Boca Raton--

Gotta say, last night talking with an NS track Foreman at Macon in the Holiday Inn bar there, my remark of Yäger "If I can't have Topper then I want Chessie" drew a laugh.

I did share my railroad background even if it was non-Agreement