David.Black@cmu-cs-a.ARPA (02/08/86)
The Conrail sale controversy has been going on for quite a while now. If the economy doesn't go sour, Conrail can be operated as a viable independent company; if the economy goes sour, all bets are off (Including Norfolk Southern's "deep pockets" argument that it could see Conrail through a recession; NS dumped both Erie Lackawanna and Delaware and Hudson in the past for financial reasons.) Conrail is presently operating with employee concessions (i.e. its train employees make less than the same employees on other major railroads). The sale of Conrail to Norfolk Southern would bring these to an end, whereas they would most likely continue if Conrail remained independent. CSX (parent of Seaboard and Chessie) is deadly serious about abandoning or otherwise disposing of the B&O if Conrail goes to Norfolk Southern. Guilford (parent of Maine Central, Boston & Maine, Delaware & Hudson) has expressed an interest in taking over the B&O in that case. The P&LE (Pittsburgh & Lake Erie) along with GTW (Grand Trunk Western) and perhaps Guilford have been negotiating with NS for trackage rights and outright sales of track if Conrail is sold to NS. The first two have reached some sort of agreement with NS; they call the new system Prorail. From what I can remember the following major pieces of track would be transferred outright: most of what used to be the Pittsburgh and West Virginia (Pgh. west thru W. Va. into Ohio), the ex-Pennsy main to Chicago via Fort Wayne, and the ex-NKP St. Louis line. The latter has been replaced/supplemented by trackage rights due to track condition problems. Details can be found in TRAINS sometime in 1985. From what I understand, neither P&LE nor Guilford is in any financial shape to take on a Conrail/NS combination. Somewhat suspicious is the fact that the lines proposed for transfer to Prorail are good candidates for abandonment by a Conrail/NS combination -- the ex P&WV (N&W) trackage serves an area much better served by Conrail, Conrail itself has been trying to abandon the Ft. Wayne line, and the Conrail line to St. Louis is in much better shape than the ex-NKP (N&W) line. At the moment Conrail has something like $1 Billion in cash along with a pile of tax-loss credits that can be carried forward for several years to come. Selling it off as an independent company would probably be the best move. All the local Congressmen and Senators favor that proposal as well. --Dave