February 05, 2016

Union Pacific cuts capital spending by 15%

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UNION Pacific (UP), Unites States, plans to invest $US 3.75bn in 2016 which it says is around $US 550m less than it invested in 2015, representing a reduction of almost 15%.

UP suffered an 8% fall in net income last year to $US 4.77bn due to a 10% drop in freight revenue and a 1% reduction in other revenue. Freight wagon loadings fell by 6% in 2015 compared with a 2.5% drop in overall railfreight traffic in the US in 2015.

"Given the decline in volume, we have taken a hard look at our capital plan and continue to invest for safety, productivity and where returns meet our threshold of reinvestability," says Mr Rob Knight, UP's CFO.

With this in mind, UP's 2016 capital spending plan includes a further $US 375m for the implementation of Positive Train Control (PTC).

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