Genesee & Wyoming Inc. subsidiary Huron Central Railway Inc. will discontinue all operations as of Oct. 31, 2009. “The downturn in the economy has caused the Huron Central’s traffic to decline substantially over the last 12 months, to the point that the railroad is not economically viable to operate for the long term,” G&W said in a statement.
Huron Central has operated the 173-mile railroad from Sudbury to Sault Ste. Marie, Ont., under a lease agreement with Canadian Pacific Railway since 1997. Operations between McKerrow and Sault Ste. Marie will cease on Aug. 15. Operation of the eastern segment of the railroad from Sudbury to McKerrow and Espanola will continue until Oct. 31. G&W said it and CP “are working closely together and with customers to effect an orderly cessation of operations.” The closure will eliminate 45 Huron Central jobs.
G&W said it expects to record charges in the second quarter of up to approximately $5.3 million after tax, or $0.15 per share, reflecting the non-cash write-down of non-current assets of approximately $7.1 million and cash costs associated with the cessation of Huron Central operations ranging from $0.4 million to $1.9 million. G&W expects this to be partially offset by cash tax benefits of approximately $3.7 million. In the year ended Dec. 31, 2008, Huron Central handled approximately 16,000 carloads, generated revenues of $7.4 million, and incurred a $2.1 million operating loss, thereby reducing G&W diluted earnings per share by approximately $0.04.