OMAHA, Neb. | CSXs new chief executive is defending the restructuring progress made in his first four months, but warned that the Jacksonville-based railroad could lay off another 700 employees this year. <\/p>\n
In a conference call on Wednesday, CEO Hunter Harrison said hes pleased with the improvements so far. <\/p>\n
I thought we had a hell of a quarter, said Harrison, who has previously led turnarounds at three other railroads. <\/p>\n
The railroad has taken nearly 900 locomotives and 60,000 freight cars out of service and laid off 2,300 people this year. And Harrison said those changes havent all paid off yet. <\/p>\n
But I wouldnt be surprised by the end of the year, if some of these things come together, that number could be 3,000, Harrison said. <\/p>\n
He gave no indication of when, where or even if the layoffs would occur, nor did CSX spokesman Rob Doolittle. <\/p>\n
The company announced the planned layoff of 1,000 management positions, most of them in Jacksonville, in February. The other 1,300 layoffs came throughout the railroads 23-state network as it continued to streamline, Doolittle said. <\/p>\n
CSX is not just reducing headcount as a way of improving efficiency we are changing the way the railroad operates, Doolittle said, which is resulting in greater operational efficiencies [fewer trains moving more freight faster], which sometimes also results in a reduction in the number of employees required to operate the railroad. <\/p>\n
Changing the operating the model a railroad uses is difficult because everyone who works there is used to operating a certain way. Harrison said the level of resistance is about what he expected. <\/p>\n
CSX is working to eliminate infrastructure it doesnt need and consolidate operations. That includes shutting down most of the railroads 12 railyards to eliminate redundancy. <\/p>\n
The railroad will also consolidate all of its dispatching into one central location instead of the current nine early next year. <\/p>\n
But Wall Street appeared disappointed with CSXs guidance for the rest of the year and the railroads shares fell 5.2 percent, or $2.86, to sell for $51.78 in afternoon trading. <\/p>\n
CSX reiterated its on track to achieve a forecast 25 percent improvement in earnings per share this year. Analysts surveyed by FactSet had been predicting adjusted annual earnings per share this year of $2.29. <\/p>\n
The 72-year-old Harrison was hired by CSX in March after pressure from the Mantle Ridge hedge fund that owns 5 percent of the railroad. Harrison previously led turnarounds of Canadian Pacific, Canadian National and the Illinois Central railroads. <\/p>\n
Im a short-timer here, said Harrison, who has a four-year contract with CSX. Im the interim person thats going to try to get this company to the next step. <\/p>\n
CSX said that its second-quarter net income improved 15 percent to $510 million, or 55 cents per share, as it hauled 2 percent more freight. Thats up from $445 million, or 47 cents per, share a year ago. <\/p>\n
The railroads quarterly results were weighed down by $122 million in restructuring charges. Without those charges, the railroad said it would have reported earnings per share of 64 cents. <\/p>\n
Most of the $122 million restructuring charge in the second quarter was related to Harrisons hiring. CSX agreed to cover $84 million in compensation that Harrison forfeited at Canadian Pacific when he retired early. Shareholders approved those payments last month. <\/p>\n
CSX operates more than 21,000 miles of track in 23 Eastern states and two Canadian provinces. <\/p>\n
Staff writer Roger Bull contributed to this report. <\/p>\n
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Despite warning of additional layoffs, CSX CEO defends restructuring progress - Florida Times-Union<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" OMAHA, Neb. | CSXs new chief executive is defending the restructuring progress made in his first four months, but warned that the Jacksonville-based railroad could lay off another 700 employees this year. In a conference call on Wednesday, CEO Hunter Harrison said hes pleased with the improvements so far Continue reading