CSX Corp. still has work to do to win back shippers following last year's service disruptions that occurred after a massive overhaul of the railroad network under its prior chief executive.
James Foote, who took over as CEO last month after the death of the railroad turnaround specialist Hunter Harrison, said CSX is starting to win back some of that business but still has to prove to some shippers that its railroad network is more reliable.
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On Tuesday, CSX reported lower revenue and freight volumes for its fourth quarter compared with the year-earlier period. The Jacksonville, Fla., company also said it would continue to cut costs by eliminating another 2,000 positions this year.
Mr. Foote said he has paid visits to customers. "I get on an airplane, go to someone's office with my hat in my hand and say, 'I'm sorry about last year, we screwed up and we didn't do a really good job for you,'" Mr. Foote said in an interview Tuesday. But he tells them, "We're getting it fixed and it's going to run a like a railroad you haven't seen before."
The executive is taking over the unfinished work of Mr. Harrison, who spent about eight months last year reshaping how CSX is run by idling hundreds of locomotives, closing rail yards and implementing a new schedule. The quick implementation caused widespread delays and disruption along the network.
Mr. Foote said he agreed with the changes made by Mr. Harrison, with whom he worked previously on the turnaround of Canadian National Railway Co., and said the aggressive timeline to implement the changes caused problems.
"We always agreed 99.9% of the time on what needed to get done," Mr. Foote said. "We didn't always agree on how you went about doing it."
Most of the disruptive changes are done and CSX is now focused on running the railroad in accordance with the new framework and winning back customers, the new CEO said. CSX anticipates only slight revenue growth in 2018, as it expects to win over more customers toward the second half of the year.
One task still left on the table is simplifying CSX's intertwined railroad network. Mr. Foote said CSX is reviewing plans to rationalize the network by selling off some track to other rail operators. "It's something that needed to be done and hadn't been done, but we're now doing it," he said.
The company is also working to fill out its management team after several senior-level departures throughout last year. Last week, Mr. Foote formed a new executive committee of about a dozen leaders to oversee the next phase of the turnaround.
It will still continue to lower costs, another hallmark of Mr. Harrison's model, with plans to cut another 2,000 jobs in 2018. The company said most of the reduction would come from employee attrition and from eliminating consultants. After cutting 4,700 positions in 2017, CSX finished last year with 24,000 employees.
The outlook came after CSX reported a sharp rise in fourth-quarter earnings to $4.1 billion, largely on a $3.6 billion benefit tied to the recently passed tax legislation. Revenue fell 5.9% to $2.86 billion, as the latest quarter was one week shorter than the year-earlier period. Otherwise, it rose slightly, with high prices offsetting a slight decline in volume.
Write to Paul Ziobro at Paul.Ziobro@wsj.com
(END) Dow Jones Newswires
January 16, 2018 19:49 ET (00:49 GMT)