ailroad CEOs can make strange bedfellows, and the proposed combination of Burlington Northern and Santa Fe and Canadian National has forced an unlikely alliance among the CEOs of Union Pacific, Norfolk Southern, CSX, and Canadian Pacific.

The leaders of these four potentially-smaller giants say they have "serious concerns with the potential impact of the BNSF/CN merger on the future structure of the rail industry." In "An Open Letter to Railroad Customers," Dick Davidson, David Goode, John Snow, and Rob Ritchie say they agree with the Surface Transportation Board that this latest megamerger "may trigger another round of railroad consolidations, resulting in two large systems serving North America." They could be "forced to develop strategic responses," because they "can't afford to stand still while another becomes disproportionately larger." As one industry observer wryly notes, "The CEOs who wrote that letter seemed to be pleading 'Stop me before I merge again.'"

Would there really be anything wrong with two transcontinental North American Class I's, fed by hundreds of healthy short lines, regionals, and terminal railroads? Isn't single-line service supposed to be the epitome of efficiency?

Is this any way to run Wall Street? It may be a bum rap, but Wall Street is getting blamed for pressuring railroads to cut back on spending. Those cutbacks can strengthen earnings and drive the stock price up, which Wall Street likes. Or, they can weaken infrastructure and equipment, erode service, and drive customers away, which nobody likes.

To whom do railroads answer? Shareholders? Customers? Contributing Editor Larry Kaufman, who wrote the cover story, says the answer is both: "Customers want railroads to take a long view, with sufficient capital investment to ensure they will have improving service. Shareowners, at least those represented by institutional owners, want to see rising earnings, free cash flow that allows dividend increases and stock buybacks. They want ownership in companies that outperform and exceed broad averages."

It is rail management's job to balance these disparate stakeholders' needs, and the long life of capital investments makes the task difficult. How much investment is sufficient for the long haul? Does anyone claim to have a crystal ball? For some insight, see p. 29.

Postscript on my trip to Cuba. "I will show you the Cuban reality," Ferrocarriles de Cuba Locomotive Specialist Felix Roman Fraga Machado told me when he hosted my visit to our embargoed neighbor last year (RA, October 1999, p. 28). Not long after my return, the Castro government allowed Felix to emigrate to the U.S. He arrived on Jan. 2, and was promptly hired by the Florida East Coast as a carman/machinist. He's now earning in two hours what he used to make in a month at FdeC. Welcome to the "American reality," Felix. There's no limit on what you can accomplish.