UP traffic, revenues at record levels; profits aren't

Railway Age, August, 2004

Union Pacific's second-quarter '04 revenues exceeded $3 billion--a record--and car loads and average revenue per car were at all time highs. But UP's profits sank 45% to $158 million, battered by the high costs of congestion and soaring fuel prices. In second-quarter '03, the railroad earned $275 million. Operating income this year dropped to $359 million from $583 million in the '03 quarter. The operating ratio in this year's quarter was 88.1% compared to 79.9% a year earlier.

"We know we aren't living up to the potential of this great company," said UP Chairman and CEO Dick Davidson, but we remain absolutely focused on resolving the operational issues that have temporarily limited profitability. By year end, we will have graduated 5,000 trainmen, acquired nearly 750 locomotives on short-and long-term leases, and taken steps to manage our business volumes. We believe these efforts will eventually allow us to catch up with the strong demand, improve network fluidity, and operate more efficiently so that we can translate this demand into bottom-line results."