Outgoing railroad CEO says better days to come
Alaska Railroad Corp. President and CEO Chris Aadnesen, seen outside the company headquarters in Anchorage, is stepping down Oct. 31 after three years on the job to deal with a family medical issue. Aadnesen has led the company through a series of challenges in the last few years, most notably the decline in fuel cargo from Flint Hills and the recent battle to preserve federal funding for the railroad.
Life on the railroad has taken Chris Aadnesen around the world from California to Mexico, to Europe and ultimately Alaska.
On Oct. 31, the Alaska Railroad Corp. president and CEO will step down from his post to tend to a prolonged family medical issue in Texas. Aadnesen’s contract with the railroad expired in September. He took the position in September 2010.
The railroad’s board of directors was expected to name Aadnesen’s replacement Oct. 23.
Before coming to Alaska, Aadnesen served as CEO of Estonian Railways and helped develop the first private-run railroad in Mexico, the Texas Mexican Railway.
His career on the rails began from the ground up.
“In the railroad business I started in San Francisco at a railroad called Western Pacific Railroad and my first job was as a stake pounder on a survey crew,” Aadnesen recalled.
From the labor crew he transitioned to management and spent 25 years in the West before heading south to Mexico.
While he once had plans to accept a two-year extension offered to him by the railroad board of directors, Aadnesen said he thinks the Alaska Railroad Corp. has weathered recent challenges to emerge with a bright future.
In March, the company announced a series of layoffs and subsequent reorganization of the railroad’s internal management structure that occurred over the following months.
Additionally, the state-owned rail company reduced its weekly freight hauls between Anchorage and Fairbanks from seven to five round trips, a move done largely as a response to reduced fuel production by Flint Hills Resources’ North Pole oil refinery.
“We took off 54 positions. We took that charge very seriously because you affect lives and the welfare of people when you do that,” Aadnesen said. “We did it with the goal of looking the same on the outside, but also with the goal of not sacrificing any of our service and making the railroad more stable for those employees that are left behind and still working here.”
By shifting personnel within the company, Aadnesen said he is confident Alaska Railroad Corp. has a stronger, more experienced management team because its members are well-versed in multiple aspects of how to run a railroad.
In 2008, the Alaska Railroad Corp. employed about 800 full-time workers. After steady declines in its primary freight — coal from Usibelli Coal’s Healy mine and Flint Hills jet fuel — the railroad has had to reduce its workforce to 570 full-time employees.
The railroad transported nearly 1.1 million tons of coal from Interior to Seward for export in 2011. Aadnesen said the 2014 forecast is for roughly 500,000 tons of coal.
Aadnesen said the slimmed freight schedule has increased train size and resulted in more freight revenue translating directly to the railroad’s bottom line, a major positive. A slight rebound in Flint Hills production helped as well.
While he couldn’t talk specific numbers, he added that revised forecast indicators for this year’s net income are “substantially” stronger than first predicted.
Compounding the challenge of handling declining freight revenue, which accounts for nearly 80 percent of the company’s total revenue intake, Aadnesen said the railroad has been charged with implementing a costly federal mandate while watching its federal funding be cut.
The Federal Railroad Administration’s requirement for all passenger railroads to implement Positive Train Control, or PTC, technology into their operating systems, will cost the railroad a total of $150 million through the 2015 PTC deadline, spokesman Tim Sullivan said.
With funding appropriation help from the State of Alaska Legislature, the railroad will have spent $62.5 million on PTC by the end of the year, Sullivan said.
PTC is a digital communications network that can remotely stop a passenger train in case of emergency.
The PTC expense, a $14 million cut to annual federal and matching funds, and declining revenue has left the Alaska Railroad Corp. with a $45 million gap versus 2011, Aadnesen said.
Still, he said he expects PTC will be implemented so the railroad can continue its “iconic” passenger service, as he called it, to its 400,000 yearly passengers.
The Alaska Railroad is the only rail company in North America to offer both freight and passenger service, something Aadnesen said the state should be proud of.
Aadnesen is particularly proud of the railroad’s employees, who are recognized throughout the industry for the job they do in continually challenging conditions and locales, he said.
“They got to work in 50-below degree weather and run trains every day; it’s remarkable,” Aadnesen said.
And after several decades in the railroad business, he said he is qualified to judge customer service. He said the service provided by Alaska Railroad Corp. staff is by far the best in North America and the passengers back up his assertion.
“If you were to see the input we got from our customers this year — we had maybe one or two complaints of one nature or another out of an entire summer and thousands of compliments. So, this railroad should be proud about that,” he said.
Going forward, the rail extension to Port MacKenzie and in the Interior the bridge over the Tanana River should offer the railroad new revenue streams in what is now a limited market, Aadnesen said. The $188 million Tanana River rail bridge is expected to be completed next August, he said, on time and within budget.
Elwood Brehmer can be reached at email@example.com.