(The Associated Press circulated the following article by James M. Amend on March 22.)
NEW YORK — CSX Corp. Chief Executive Michael J. Ward said Thursday the railroad operator won’t sacrifice capital spending, especially on projects related to safety, to improve cash flow.
“That’s something we won’t even consider,” Ward told analysts at the JP Morgan Aviation & Transportation Conference in New York.
Ward’s remarks came three days after the head of the Federal Railroad Administration said recent derailments of CSX trains in New York have raised “real and serious questions” about the company’s safety programs and ordered an immediate inspection of 1,300 miles of track.
The investigation came at the urging of U.S. Sens. Charles Schumer and Hillary Rodham Clinton, who were responding to a derailment on March 12, when 28 cars on an 80-car freight train in upstate New York jumped the tracks. Eight tanker cars contained flammable substances and caught fire, forcing the temporary evacuation of thousands of residents and the closure of schools and roadways as giant fireballs rose in the sky. No deaths or injuries were reported.
The incident marked the fifth derailment involving CSX in New York since December. Jacksonville, Fla.-based CSX is also rebounding from a derailment in Brooks, Ky., which so far has cost the railroad $30 million.
“Lately we’ve had an accident almost every other week around the state,” Schumer said on March 14. “Enough is enough.”
Data from Schumer’s office shows that 572 upstate New York rail accidents in the past seven years have caused a total of $34 million in damages.
Ward said CSX, which is cooperating with the investigation, reinvested $1.4 billion into its operations last year and plans to spend the same this year. About 58 percent of that money will go to its infrastructure, while it will spend 12 percent on both locomotives and freight cars. The remaining 18 percent is slated for new capacity.
At the same time, CSX said in February it would buy back $2 billion worth of stock, or 10 percent of its outstanding shares, over the next two years. It also plans to increase its annual dividend by 20 percent.
Ward noted that CSX recorded the most improved safety record in 2006. In terms of derailments, the company ranks third among the four Class 1 railroads that report the data. He expressed doubt that the New York investigation would uncover any wrongdoing by the company.
“This so-called investigation will find little there,” he said.
Shares of CSX fell 16 cents to $39.90 in morning trading on the New York Stock Exchange.