Consolidated Rail Corp. (Conrail) said yesterday it will take another $1.3 billion in direct federal subsidies to get the Northeast's rail system back on the track.
Submitting a five-year operating plan described as "aggressive and optimistic" by Chairman Edward G. Jordan, Confrail said it also may need federal guarantees for almost $1 billion in private financing.
In addition, Conrail is counting on government aid or freight rate increases to pay "several hundred million dollars" of pension costs and is seeking additional aid from states in which it operates commuter trains and local freight services.
The new five-year plan is Conrail's first plea for additional federal aid since it was chartered by Congress to take over in April 1976 the Penn Central and five other bankrupt railroads.
In Washington, Secretary of Transportation Brock Adams said "Im not surprised additional money is needed. I am concerned about the amount."
Adams said there is "not in any sense an emergency" in getting more federal aid for Conrail, which was launched with $2,026 billion in federal loans and loan guarantees.
Jordan said Conrail willuse up its original appropriation next year and still will be losing money.
Projection its first profits in 1980 - one year later than originally promised - Conrail said it expects to lose $35 million over the next five years, rather than making the $1,455 billion profit once was anticipated.
Jordan said the main reason Conrail is falling short of its goal is that the cars and tracks of the railroads it took over were in much worse condition than either Conrail or Congress realized, a view backed by Adams.
Conrail also blamed severe winters this year and last, the Johnstown, Pa., flood which severely damaged the Penn Central main line, and the dock and coal strikes for its problems.
Another reason Conrail is falling short of its goal is that the United States Railway Association seriously underestimated the task of turning around the rail lines, Jordan said. USRA monitors and provides financing for the nation's railroads.
Over the next five years, Conrail's revenues are expected to total $18.9 billion, about $1.7 billion less than USRA predicted. The cost of fixing up Conrail's cars and tracks will be $10.5 billion, which is $677 million more than expected. Track improvements are ahead of schedule, but car rehabilitation is lagging, he said.
Next week Conrail will announce results for its first 21 months of operations, and they will be roughly the $567 million loss USRA had predicted, Conrail officials said.
The losses are expected to continue at that $300 million-dollar-a-year rate through 1978 because of the lag in revenues and the added repair costs, Jordan said.
The additional $1,283 billion in federal aid will be needed to offset those losses and to provide additional operating funds, Conrail's spokesman said.
Conrail also needs to raise $959 million in private capital to buy new equipment in the next five years.
The nearly $1 billion worth of new equipment financing "may require government guarantees or other forms of support to assume full private-sector participation," Contrail's chief executive said.
While Conrail was outlining its financial needs in Philadelphia, Secretary of Transportation Adams was holding a press conference in Washington. Adams issued a statement saying he and Treasury Secretary W. Michael Blumenthal agree "it is not reasonably to become financially self-sustaining without additional federal assistance."
Making clear that he was not endorsing Conrail's request for $1.3 billion, Adams said he wanted Congress to hold hearings this summer so additional funds could be available by fiscal 1980. Conrail has about $875 million of its original appropriations left to draw on until then.
Saying the request for additional money does not mean Conrail has failed - "in many ways it has worked exceedingly well" - Adams said he opposed bankrolling financially troubled midwestern rail lines with a similiar venture that has been dubbed "farm rail."
In projecting its needs for additional capital, Conrail admitted it is falling short ot its own goals for improving service, and as a resutl revenues and rail traffic are not improving as fas had been expected.
Jordan refused to disclose Conrail's strategy for boosting traffic, but said the company hopes to order 11,000 new freight cars and 11,000 more "piggyback" cars that carry truck trailers of containers.
He also would not discuss Conrail's approach to labor negotiations, although the company said it is seeking major changes in work rules that will help it reduce its labor costs which are about 10 percent higher than those of other railroads.
The five-year plan calls for closing that gap and cutting labor costs by $500 million, reducing the work force through attrition.
Jordan said Conrail also hopes to reduce operating expenses by down-grading some main lines to branch lines, and abandoning some additional lines which cannot be made profitable.
He said the 17,000-mile rail network is larger than needed and 730 miles of branch lines are under study for potential abandoment.
Another critical cost factor for Conrail is the Railroad Retirement Fund which provides pensions for its workers, many of whom are nearing retirement age.
The system is underfunded, but Conrail said it assumes the government will solve that problem so Conrail will not have to makeup the differnece. Recent increases in Social Security taxes - which finance part of Railroad Retirement - will have to be paid by higher freight rates unless some government action is taken, Conrail said.