(The following article by Brent Jang was posted on the Globe and Mail website on April 26.)
CALGARY — Canadian Pacific Railway Ltd. would like to see a bullet train between Calgary and Edmonton and has assigned a senior executive to work with government and other partners to review the feasibility of the project.
Jane O’Hagan, CPR’s vice-president of strategy and external affairs, is heading the railway’s efforts to help get the passenger service built.
With CPR posting a record first-quarter profit of $111-million and more good times forecast for freight shipments, the Calgary-based company is well positioned to start tackling a long-term venture on the passenger side, said retiring chief executive officer Robert Ritchie.
In an interview yesterday, he said he’s worried that if the construction boom continues in Calgary and Edmonton, new buildings will obstruct the proposed route for a high-speed train. Calgary, in particular, is experiencing a downtown renaissance, with towers sprouting as oil prices skyrocket. “This town’s on fire,” Mr. Ritchie said, looking out his office window at one of numerous construction cranes.
Estimates for the rail megaproject range from $1.7-billion to $3.4-billion, depending on factors such as whether existing tracks are used or new rails installed.
CPR is hoping the bullet-train idea will gain political momentum next year after provincial Conservatives elect a new leader to replace Premier Ralph Klein. The railway wants the province to pick up part of the cost of the rail venture.
“As Alberta continues to grow, I think you have to start looking at the Edmonton-Calgary corridor as one place,” Mr. Ritchie said. “The ability to travel from downtown to downtown within two hours by rail would change the personality of this province. Each city has about one million people, too small to be independent centres. The ability to get back and forth will help cultural and educational institutions and businesses.”
The province could play a key role because it will benefit from easing congestion and reducing car emissions on Highway 2, main artery between Calgary and Edmonton, he added. “The government should pay for upgrading rail infrastructure, not unlike what they’re already doing for highways.” But CPR will accept whatever the province decides, even if it means abandoning the project.
Mr. Ritchie, 61, will retire at CPR’s annual meeting in Calgary on May 5, when chief operating officer Fred Green takes over as CEO.
During a conference call yesterday, Mr. Green said CPR’s first-quarter profit jumped 38 per cent to $111-million, despite lower revenue from coal and potash shipments, which remain “short-term wild cards.” The profit exceeded analysts’ expectations.
The company’s total revenue rose 10 per cent while it controlled costs, said Ken Hoexter, an analyst at Merrill Lynch & Co. Inc.
First-quarter operating ratio, a key indicator of productivity that measures operating costs as a percentage of revenue, improved three percentage points to 79.4 per cent.
Looking ahead, CPR raised its oil-price forecast to $66 (U.S.) a barrel this year from an earlier estimate of $58. The company recovers about 90 per cent of its diesel expenses through fuel surcharges to customers. In the latest quarter, a mild winter helped save roughly $5-million (Canadian) because there wasn’t much snow.
As for his pending retirement, Mr. Ritchie plans to go on an extended sailing trip with his wife to Europe from Victoria, where their boat is anchored. The “dream” trip down the West Coast of North America, then across the Panama Canal and across the Atlantic Ocean is expected to take two years. But it won’t be a race because there will be stops at various ports and also return trips by plane to Calgary to catch a breather from sailing.