Canadian Pacific Railway, demonstrating a drive to increase profitability while beset by a proxy war, will spend up to $1.2 billion on capital improvements over the next several years.
CP President and CEO Fred Green said the investment will “allow us to achieve a low 70s operating ratio in the next three years.” Activist investor William Ackman wants to replace Green with former Canadian National Railway CEO Hunter Harrison to bring the railroad’s ratio down to 65.
Weather delays and not being prepared for the resurgence of traffic post-2008 have hurt the railroad’s profitability. CP previously said it will spend more than $450 million on new and expanded siding so it can operate 11 percent longer trains by 2013.
Ackman, whose firm, Pershing Square Capital Management, is the railroad’s largest shareholder, said he expects Harrison’s past performance will convince shareholders to replace the 15-member board at the next annual meeting in May. CP and CN report their fourth-quarter earnings next week.