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Burlington Northern Santa Fe April 4 announced its own plan to offset the weakening economy, following plans previously announced by fellow U.S. Class Is Norfolk Southern Railway, Union Pacific Railroad and, most recently, Kansas City Southern Railway.
With a flat year-over-year freight revenue outlook in mind, BNSF plans to eliminate approximately $100 million of proposed 2001 capital and other investments — primarily for certain expansion and discretionary projects — and implement initiatives designed to lower ongoing quarterly operating expenses by nearly $20 million.
"These actions are necessary because of continued softness in the overall U.S. economy, especially industrial production and weakening consumer confidence," said Matthew Rose, BNSF president and chief executive officer, in a prepared statement. "We need to align our spending with our revenue forecast for the balance of 2001 to protect our goal of improving free cash flow while providing our customers with the service they require."
BNSF also plans to record a $40 million non-recurring, after-tax expense for first-quarter 2001 — to be announced April 24 with first-quarter results — as a write-down of non-rail investments, including its PathNet telecommunications venture, portfolio of other non-core real estate and the company’s struggling FreightWise Inc. Web site.
The railroad’s first-quarter results also would include a $6 million after-tax extraordinary charge to extinguish debt earlier than expected.
"Without these charges, we expect first-quarter earnings per share to be within the range of analysts’ expectations, but slightly below consensus," said Rose.