Consolidated Rail Corp., the Philadelphia-based company that took over major portions of the bankrupt rail system in the Northeast and Midwest on April 1, 1976, has been given generally good marks on its initial nine months in business by a government monitoring agency.
In a report to Congress made public yesterday, the U.S. Railway Association said it is too early to judge ConRail's future financial self-sufficiency in any conclusive way. But the railroad company generally achieved or surpassed initial performance goals, the government agency reported.
While ConRail today "generally is providing considerably better service than ite predecessor railroads." U.S. Railway noted that the railroad faces varied roadblocks which could prevent a return of the government-aided system to private enterprise.
Still to be accomplished are rate increases for some goods now being carried below cost, improved labor productivity, full compensation for commuter services and freight operations over subsidized branch lines, and continued economic growth.
"It is important to stress these points, lest ConRail's success in controlling expenses during 1976 leads to the belief that it can maintain excess facilities, provide unprofitable services or forego necessary rate increases and still meet the goals of [federal legislation] and be successful as a private, profitable carrier," association chairman Arthur D. Lewis said.
For example, yesterday's report said ConRail's expenses in operating freight trains over subsidized branch lines in the year ended April 1 were $62.1 million compared with revenues of $44 million. Increased state subsidies could cut this expense to $9 million a year, the agency said.
Overal 1, ConRail's rehabilitation of tracks has moved forward at a faster pace than anticipated by federal planners, and the railroad's April 1-Dec. 31 net loss of $205 million was $91 million less than expected - requiring $212 million less in federal aid U.S. Railway said. that the firm will become self-sufficient before exhausting its federal aid limit of $2.1 billion in guaranteed loans and direct grants, Lewis said.
The projection of self-sufficiency has been maintained despite the bitter cold weather last winter, which reduced ConRail's earnings by more than $100 million. A recovery program to make up these losses is in progress and is being "closely monitored," the agency added.
A major problem involves raising rates on some commodities now being carried at less than cost, U.S. Railway said it had assumed in earlier planning that ConRail would be able to raise such rates as well as general freight charges to a lever somewhat higher than has been achieved.
In another development yesterday, the Department of Transportation's Federal Railroad Administration announced that federal money for rehabilitation and improvement work has become available for other railroads under the same legislation that established ConRail.
Applications will be expedited for projects that can be completed this year, FRA said. To date, six rail firms have submitted requests for $375.4 million of loan aid -.
The lines involved are the Milwaukee Road.Chicago & North Western, Columbus & Greenville, Rock Island, Illinois Central Gulf and Boston & Maine. FRA said it wants to stimulate employment - particularly among minorities - with the rebuilding projects.