Canadian Pacific, CSX Nail Down Support for Acquisitions

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The Class I railroads seeking to acquire or merge with other freight railroads want to prove to federal regulators and the broader public that their proposed acquisitions would benefit passenger rail and local communities.

The support comes at a time when the Biden administration seeks to expand intercity passenger rail service, while last year's infrastructure package also addressed potential intercity rail opportunities.

First off, Amtrak is lending support to Canadian Pacific's proposed acquisition of Kansas City Southern.

Amtrak said the merged CP and KCS would cooperate with it on passenger rail service to:

Increase frequency on the Hiawatha Service between Chicago and Milwaukee. The merger would also realize the benefits of the Muskego Yard freight bypass of the Milwaukee Intermodal Station project, Wisconsin Department of Transportation Secretary Craig Thompson said.
Extend the Hiawatha Service from Milwaukee to St. Paul, Minnesota, to create a second round trip on the Twin Cities-Milwaukee-Chicago corridor.
Provide passenger service through the Detroit River Tunnel between Michigan and Ontario to Windsor and Toronto (with connections to VIA Rail Canada).
Establish Amtrak service between New Orleans and Baton Rouge, Louisiana.
Study the potential for Amtrak service between Meridian, Mississippi, and Dallas.

Amtrak and CP (NYSE:CP) will file their agreement committing to passenger rail service expansion with the Surface Transportation Board. The board will be reviewing CP's and KCS' merger application this year. Shareholders of CP and KCS both voted in favor of the merger late last year.

"CP has been an excellent host of Amtrak intercity passenger service year after year and has established itself as a leader in the railroad industry," Amtrak President Stephen J. Gardner said. "We welcome CP's commitment to our efforts with states and others to expand Amtrak service and are pleased to have reached an agreement formalizing CP's support of Amtrak expansion in the Midwest and the South. Given CP's consistent record as an Amtrak host, we support CP's proposal to expand its network."

Amtrak has consistently given CP an A rating in its annual host railroad report card, and CP is the first Class I railroad to complete 100% certification of its Amtrak schedules to STB, Amtrak said in Thursday's release.

Meanwhile, CSX has said it has garnered support from local officials and businesses in New York, New Hampshire, Massachusetts, Connecticut, and Maine for its plan to acquire New England short line railroad Pan Am Railways.

CSX (NASDAQ:CSX) said the acquisition would connect New England with CSX's existing 23-state network, and CSX would invest in infrastructure upgrades to improve freight and passenger rail service in the region, according to a series of press releases on Tuesday.

CSX quoted New Hampshire Gov. Christopher T. Sununu as saying the acquisition would benefit the state "because it would provide continuous, single-line rail service and provide additional resources to improve and market the line with the potential to bring additional freight service to New England markets. The ability to create more opportunity for freight service in New Hampshire would take additional trucks off the road, which would be beneficial for both the economy and the environment."

CSX also finally received the support of the state of Vermont, which had expressed concerns about how the acquisition would affect rail service there. CSX and Vermont reached a settlement and presented it to STB on Monday. Private companies Trans Rail Holding Co., Vermont Railway, Green Mountain Railroad, and Washington County Railroad operate on state-owned rail lines.

STB will hold virtual hearings on CSX's proposed acquisition of Pan Am next Thursday and Friday.

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