The Pittsburgh & Lake Erie Railroad's sales agreement with the Chicago West Pullman Transportation Corp. has expired, according to a spokesman for the ailing railroad.
It was not an open-ended agreement, the official said late Wednesday, and it has expired.The spokesman's comments came in reaction to a statement earlier in the week from CWPT that warned P&LE not to liquidate because it still has a valid contract to purchase the line for $75 million.
The P&LE's woes have only grown since the sales agreement was announced in September, and recent developments illustrate that the railroad is far from out of the woods.
The railroad has found itself at the center of a legal controversy between industry management and labor, and is presently under court order to not complete the sale until it reaches an agreement with its 750 unionized employees over the terms of the transaction.
The P&LE has appealed the ruling to the 3rd U.S. Circuit Court of Appeals in Philadelphia, which is still weighing its verdict.
The court decision has effectively stopped what had been a burgeoning number of short-line and regional rail sales.
Last week, P&LE President Gordon E. Neuenschwander said the company was not accepting new freight business and would liquidate many of its assets in order to reduce its heavy financial obligations.
That, in turn, led CWPT this week to warn that it still expected the deal to go through.
Robert E. Smith, president of CWPT's subsidiary P&LE Railco, said the firm is ready to buy the railroad upon compliance by the P&LE with the court's order.
The P&LE spokesman, however, said the company believes the pact has expired because it could not be completed in the time period specified in the agreement.
The official said the railroad has continued the process of liquidating its enormous car fleet; it now owns some 8,000 cars, down from 18,000 in 1980 and up to 28,000 in 1976.
Part of P&LE's business woes developed after the 1976 decision by Conrail to buy more of its own fleet. Up to that time, P&LE had been a major supplier of cars for the Penn Central, and before that, for the New York Central.
According to CWPT officials, the P&LE lost some $60 million over the past five years.
The 121-mile railroad, whose main line runs from Connellsville, Pa., through Pittsburgh, to Youngstown, Ohio, had once been a major money-earner for the New York Central.