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For Genesee & Wyoming Inc. (GWI), the second quarter might best be described as the good, the bad and the ugly. The good: revenue and operating income gains. The bad: lower net income and earnings, and a higher operating ratio. The ugly: mounting losses from Mexican operations — to the point GWI is liquidating the subsidiary.

Yesterday, the holding company reported second-quarter revenue of $132.1 million, up 16.3 percent compared with second-quarter 2006 primarily because of acquisitions. Same-railroad revenue rose 3.4 percent, benefiting from increases in South Australian, industrial switching and port railroad business.

In addition, second-quarter operating income totaling $17.5 million increased 7 percent compared with second-quarter 2006.

However, net income plummeted from $117.7 million to $10.7 million and diluted earnings per share plunged from $2.76 to 27 cents primarily because of operating losses totaling $4.5 million (pre- and after-tax) at Mexican subsidiary Ferrocarriles Chiapas-Mayab S.A. de C.V. The railroad, which never recovered from infrastructure damage inflicted by Hurricane Stan in October 2005, plans to cease operations and terminate its 30-year concession from the Mexican government.

“The closure … is proceeding as planned, with operations scheduled to end in the third quarter and the liquidation of assets expected to be completed by year end,” said GWI Chief Executive Officer John Hellmann in a prepared statement.

GWI — which owns and operates regionals and short lines in the United States, Canada, Mexico, Australia and Bolivia — also reported that its second-quarter operating ratio increased 1.2 points to 86.8 and operating expenses rose 18 percent to $114.7 million compared with second-quarter 2006.