THE VIRGINIAN-PILOT
Copyright (c) 1997, Landmark Communications, Inc.
DATE: Thursday, February 20, 1997 TAG: 9702200112
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY CHRISTOPHER DINSMORE, STAFF WRITER
LENGTH: 42 lines
The battle royal for Conrail may be just a prelude for transcontinental mergers that will create two nationwide railroads, a Norfolk Southern executive said Wednesday.
``In my personal opinion, eventually there will be just two major railroads and each of the two major railroads will go everywhere,'' said Bill Schafer, director of Norfolk Southern's strategic planning department.
Norfolk-based Norfolk Southern Corp. is positioning itself to be one of the survivors. It is attempting to wrestle Conrail Inc. away from its merger partner, CSX Corp.
Philadelphia-based Conrail has shunned Norfolk Southern's $10.3 billion buyout in favor of a $9.5 billion ``merger of equals''with Richmond-based CSX.
The fight is at a standstill and the sides may be negotiating a compromise, but no one is commenting publicly on the possibility.
One obstacle is Conrail's insistence on not being divided between CSX and Norfolk Southern, Schafer told a Hampton Roads Foreign Commerce Club luncheon.
Conrail, formed by Congress from the remains of six bankrupt railroads, enjoys a monopoly in the Northeast.
Recent mergers in the West reduced the number of major Western railroads from four to two, Union Pacific Corp. and Burlington Northern Santa Fe Corp.
CSX and Norfolk Southern already serve most markets in the Southeast and Midwest. If they both had competitive access to the Northeast, there would be two Eastern railroads matched up with two Western railroads and mergers might be inevitable.
``From my standpoint, that is the logical conclusion,'' Schafer said. ``The major trucking companies, the major airlines, the major parcel express companies, they all go everywhere in the continental United States.'' MEMO: Staff writer Christopher Dinsmore can be phoned at (757) 446-2271
or e-mailed at dins@pilotonline.com ILLUSTRATION: Photo
Bill Schafer