Union Pacific estimates $3.75B capital program in 2016

Written by Mischa Wanek-Libman, editor
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Union Pacific is planning for a $3.75 billion capital program in 2016, pending approval from its board the railroad said in an earning release.

 

The 2016 program is approximately $450 million less than its planned spend in 2015. The 2015 capital program was driven by equipment acquisitions and infrastructure investments, as well as a significant increase in Positive Train Control (PTC) spending.

The 2016 capital plan aims to spend $1.825 billion on infrastructure replacement, down $25 million from the previous year, $965 million on locomotives and equipment, a reduction of $135 million from 2015, $$395 million on capacity and commercial facilities, which is down from the $650 million spent in 2015, $190 million on technology, down $10 million from last year and $375 million on PTC, down from 2015’s $400 million investment.

UP’s engineering program will focus on tie and rail replacements and the railroad will accelerate bridge replacements in 2016.

Regarding the year ahead, Lance Fritz, chairman, president and chief executive officer said, “This past year was a difficult one in many respects, but our team did outstanding work in the face of dramatic declines in volumes and shifts in our business mix. Overall economic conditions, uncertainty in the energy markets, commodity prices and the strength of the U.S. dollar will continue to have a major impact on our business this year. However, we are well-positioned to efficiently serve customers in existing markets as they rebound. The strength and diversity of the Union Pacific franchise also will provide tremendous opportunities for new business development as both domestic and global markets evolve. When combined with our unrelenting focus on safety, productivity and service, these opportunities will translate into an excellent experience for our customers and strong value for our shareholders in the years ahead.”

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