The chairmen of the Burlington Northern Railroad and the St. Louis-San Francisco Railway Co. yesterday appealed to the Interstate Commerce Commission to approve a proposed merger of the two lines.
R.C. Grayson of the Frisco and Louis Menk of the BN spoke at the first day of ICC hearings on the huge merger, which the railroad executives said would result in higher quality and more frequent and reliable service to shippers.
The ICC must approve any rail merger.
"The merger of these two railroads will produce an estimated $32.8 million in pretax benefits after the third year . . ." said Menk. He said the new railroad "will enable single-line service in an area extending from the Gulf Coast through the Midwest to the Northwest, and from the Great Lakes to the Texas coast."
"With the inclusion of the Frisco, the merged company will be able to participate in and assist the expansion occuring in the Southeast and Southwest," Menk added.
The BN already is the largest U.S. railroad system in terms of miles of road operated, and the second largest in terms of 1976 transportation revenues. The BN itself was formed in 1970 when three major lines and some smaller subsidiaries merged.
Operating in 19 states and two Canadian provinces, the BN has principal routes between Denver and Chicago, from Chicago to the Northwest through the Twin Cities, Omaha to Billings through eastern Wyoming, and Vancouver, B.C., to northern California.
The BN ships large amounts of coal, farm products, lumber and food products over some 25,000 miles of track.
According to Menk, the merger will benefit everyone, and even result in increased competition.
Frisco's Grayson agreed with Menk on every point in his remarks. "The merger will permit efficiencies that are not possible today under separate management," he said.
Grayson cited recent ICC staff reports indicating that the commission favors mergers to rationalize the national rail system. "Such a plan is necessary to permit the continuance of essential rail service and to permit growth and expansion," he said.
Grayson also said the merger would result in increased employment. "By the third year, it is estimated a systemwide total of 248 jobs will be added, with increased wages approximating $2.8 million," he said.
The Frisco, which operates over some $4,710 miles of track in the Midwest and Gulf Coast areas employs more than 8000 persons. Grayson said that although some jobs would be lost initially by elimination of duplicative service, most of the workers would be absorbed into new positions.
Grayson broke down into two categories the estimated $32.8 million in increased revenue for the new line after three years:
Increased traffic resulting in before-tax income of $17.1 million.
Operating efficiencies and consolidations resulting in an approximate benefit of $20.3 million.
But that $37.4 million gain will be reduced by $4.6 million allocated for employe protection costs.
"The approval of the merger . . . may well act as a catalyst causing other railroads to direct themselves to unification studies which will promote continued viability of the country's railroad system," Grayson said.
The hearings are expected to go on for several days.