RAILS' OPERATING INCOME FALLS 67 PERCENT

RAILS' OPERATING INCOME FALLS 67 PERCENT

The nation's Class 1 railroads reported a 67.1 percent decline in operating income in the third quarter of 1991, entirely the result of special charges taken in connection with restructuring programs.

A report by the Association of American Railroads, covering composite results for railroads that carry about 94 percent of all intercity rail traffic, points out operating income increased 7.5 percent from the comparable quarter of 1990 when special charges are eliminated.There were no special charges in the 1990 period.

Traffic, measured in ton-miles (the equivalent of one ton of freight carried one mile), was 3.4 percent higher than in the year earlier period. A 3 percent decline in average revenue for each ton-mile, however, caused revenue to remain virtually unchanged.

Operating expenses declined 0.8 percent before taking into account the special charges, which increased the expenses 11.5 percent.

"Only continuing productivity has protected the railroads from major declines in profits," said Richard E. Briggs, AAR executive vice president.

For the 12 months ended Sept. 30, 1991, Class 1 railroads had a 3.4 percent return on net investment, down from 6.3 percent in the comparable period of 1990. The Interstate Commerce Commission has set the industry's cost of capital at 11.8 percent.