CN Rail sets regional spending plans

Tue Mar 18, 2008 1:40pm EDT
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VANCOUVER, British Columbia (Reuters) - Canadian National Railway Co (CNR.TO: Quote) laid out its regional spending plans on Tuesday for more than C$1.0 billion ($1 billion) in track and infrastructure work planned for North America this year.

CN Rail, which had already pegged its total 2008 capital spending, including new locomotives, at C$1.5 billion, said it will spend C$430 million in Western Canada, and C$300 million in both Eastern Canada and the United States.

The money will be used to repair and upgrade track, bridges and switching yards, which the company said will increase its operational efficiency. CN also plans to spend some C$250 million on facilities such as distribution centers.

CN said Tuesday's figures included spending on the Athabasca Northern Railway in Alberta that it purchased late last year, but not for the Elgin, Joliet & Eastern Railway in the United States that it is in the process of buying.

CN has proposed to spend $100 million to upgrade the Chicago-area EJ&E, but the planned purchase has run into political opposition from some local communities upset about a potential increase in train traffic.

CN's Chief Executive Hunter Harrison complained on Monday that opponents of the $300 million deal were being unrealistic in their demands for what the railway should do to reduce potential delays at grade crossings.

The company announced in December it would spend C$135 over the next three years to rebuild the 325 km (200 mile) Athabasca Northern, which was threatened with abandonment because of deteriorating track.

CN's capital spending plan for 2007 included about C$800 million in track and bridge replacement and C$200 million on projects such as siding expansions in Western Canada and rebuilding a freight yard in Memphis, Tennessee.

($1=$0.99 Canadian)

(Reporting by Allan Dowd; Editing by Bernadette Baum)

<p>Rail cars at the CN MacMillan Yard in Toronto February 10, 2007. REUTERS/J.P. Moczulski</p>