Railroad forecasts higher revenues but less profit in '02
The state-owned railroad is predicting revenues of just less than $107 million next year with profits of $4.2 million. That compares to an estimated $105 million in revenues for 2001, with profits of $6.4 million, according to railroad’s budget Dec. 5.
Nearly $78 million in rail improvements are planned next year, with the bulk of the money coming from federal sources, augmented with about $13 million from the railroad.
The railroad receives no money from the state.
More than $3.5 million in additional corporate overhead costs will hurt the railroad’s bottom line in 2002.
According to Bill O’Leary, the railroad’s chief financial officer, corporate overhead includes such things as litigation, personnel costs not reflected elsewhere in the budget, and charges between departments.
Not all details of those expenses are made public, as railroad officials only discuss the costs behind closed doors in executive session.
The railroad is forecasting freight revenues to be $80 million for 2002, up from $74.9 million this year. Freight revenues have more than quadrupled in the last five years.
Petroleum makes up most of the freight revenue for the railroad, projected at $36 million for 2002, up $270,000 from 2001.
Decreased oil activity on the North Slope will hurt revenues by more than $1 million for the railroad’s joint rail-barge venture with Seattle-based Lynden Inc., according to O’Leary. The shipments, barged from Seattle then transferred to rail, mostly include pipes and other supplies and heavy equipment used in oil field operations and maintenance.
Freight revenue for the railroad is projected to increase in all other categories, including coal and gravel, which was hauled in record numbers this year and last.
O’Leary said after next year it’s unlikely the railroad will see another spike in gravel hauling for a few years, and expects the loads to decrease in 2003.
Passenger revenues are estimated at $14.2 million for 2001, and railroad officials are projecting an increase to $14.9 million for 2002.
Passenger numbers are projected to be about 500,000 for 2001, about the same as the prior year. Those numbers are down from 679,000 in 1999.
The reduction in ridership and revenues is blamed on the 2.5-mile Anton Anderson Memorial Tunnel, which opened Whittier to road traffic in June, 2000, according to railroad officials.
The state-owned railroad has taken steps since then to move more passengers along its 525-mile line, including streamlining its marketing operations and adding more locomotives.
Real estate revenue from land the railroad leases is expected to increase from $5.3 million to about $5.7 million, according to the railroad’s budget.
Costs associated with the railroad’s executives and seven-member board will increase from $1.5 million to $2.1 million for 2002, according to the railroad’s budget.
A temporary hiring freeze will contribute to a decrease of about $1 million to $37.5 million in salaries for employees for 2002, according to O’Leary.
The cost of benefits to employees including health insurance and pensions will increase more than $1 million in 2002, to $9.1 million, according to the railroad’s budget.
Fuel costs for the railroad are forecasted at about $500,000 more for 2002. The railroad had been paying for fuel under a contract that was below market rate. The contract expires at the end of 2001, and the railroad expects to pay the going rate, O’Leary said.