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GATX Corp. posted solid first-quarter financials, and the company's rail unit had a lot to do with it.

For the three-month period ended March 31, the finance and leasing company reported net income of $22.9 million — compared with $1.8 million for the same 2003 period, which include an $11 million after-tax loss provision related to the company's air portfolio.

"The 2004 first quarter results reflect the continuation of a pattern that developed during 2003: a gradual improvement in underlying market fundamentals, decreased operating volatility, and improved credit quality," said GATX Chairman and President Ronald Zech in an April 22 prepared statement. "Progress during the quarter was more evident in certain aspects of our business, such as remarketing gains where we were able to capitalize on an active secondary market, while the pace of recovery in other key areas, such as lease rates, was slower."

GATX Rail reported net income of $12.7 million, a 12.3 percent increase compared with the same 2003 period. Higher remarketing gains on rail equipment, including certain locomotive sales, primarily drove the increase. Additionally, higher scrap metal prices raised the value realized on cars scrapped during the quarter.

GATX Rail's North American operations continue to show a gradual, consistent improvement in terms of new car orders, inquiries and utilization. The North American active car count increased by about 550 cars during the quarter, and coupled with car scrapping, helped increase total utilization to 94 percent compared with 93 percent at 2003's end.

Meanwhile, GATX Rail invested $70 million in rail cars — about 1,300 total cars — during the quarter compared with $49 million in the prior-year period. Rate pressure on lease renewals for certain car types continued due to the renewal of cars coming off older, higher-rate leases, Zech said, adding that rate pressure likely will continue through 2004.