(Reuters circulated the following article on January 31.)
VANCOUVER, British Columbia — Canadian Pacific Railway Ltd.
CP Rail, Canada’s No. 2 railway, said it is cutting 400 management and administrative employees, about 2.5 percent of its total workforce, with the bulk if the reductions coming at its Calgary, Alberta, headquarters.
The 13,800-mile (22,000-kilometer) railway overhauled its operating management structure at the beginning of the year, moving away from the highly centralized structure it adopted when it moved its head office to Calgary from Montreal in 1995.
Chief Operating Officer and President Fred Green said the old structure had allowed Canadian Pacific to develop its current operating plan, but less centralized management will allow decisions to be made faster in the field.
“We know exactly what we want to accomplish. We have migrated now from a lot of thinking and planning into the very very important step of execution excellence,” Green told reporters and analysts in a conference call.
Chief Financial Officer Mike Waites told analysts 170 of the jobs had already been eliminated and the bulk of the remaining cuts would be finished by the end of the first quarter.
The railroad has said it is also laying off 140 unionized train crew employees, at least temporarily, to cope with weak coal shipping volumes and mild winter weather.
In the quarter, it earned C$135 million ($118 million), or 85 Canadian cents a share, up from a year-earlier profit of C$129 million, or 81 Canadian cents a share.
The latest round of job cuts prompted an after-tax charge of C$28 million.
The railway also had C$61 million less of foreign exchange gains on long-term debt than it did 12 months earlier.
Excluding unusual items, income rose 45 percent to C$169 million, or C$1.06 a share, it said.
Revenue was C$1.2 billion, up 14 percent from C$1 billion, with results in the quarter benefiting from double-digit revenue hikes from five of its seven business lines, CP said.
However, operating costs jumped to C$865 million from C$789 million, mostly due to higher fuel prices as crude oil averaged more than $60 a barrel in the quarter, CP Rail said.
Excluding special items, the railway’s operating ratio, a measure of efficiency, improved to 74.1 percent from 77.2 percent in the last quarter of 2004.
Some industry observers have complained that CP’s operating ratio lags that of larger rival Canadian National Railway
“They’re certainly two different companies, although we both begin with the name Canadian…. I don’t see us chasing some magic number because they are companies with different assets and have abilities to do different things,” Ritchie said.