The Financial Viability of Conrail Page: 4
xii, 80 p. : ill. ; 28 cm.View a full description of this report.
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SENSITIVITY ANALYSIS
Adjusting USRA'S estimates for possible outcomes that
are more pessimistic or optimistic than the FSP forecast
serves to illustrate how much worse or how much better
ConRail's financial outlook might be over the period to 1985.
Coal Revenues Could Be Higher - The FSP assumed that coal tonnage
shipped by ConRail will grow 36 percent by 1985. But, growth
of 58 percent is possible if national coal production doubles
in accordance with current plans. This adjustment would increase
ConRail revenues by $752 million. Profits would rise by $150
million. In addition, a 50 per ton rate increase for coal
shipments is possible in 1976. If implemented, ConRail's coal
revenues would jump $375 million and profits would increase by
the same amount.
Operating Improvements Will Fall Short of USRA Expectations -
If the efficiency gains anticipated by USRA in the FSP occur later
and fall short of USRA projections, the investment required by
ConRail would increase $1 billion and operating costs would grow
by $1.85 billion. Illustrative of the failures that would
produce this result are: only 50 percent of the equipment utiliza-
tion savings are achieved and not until two years after the USRA
schedule, yard rehabilitation fails to reduce yard operating
expenses, and only 75 percent of blocking improvements are
achieved (see Chapter 6 for complete details).
The Federal Government May be Burdened with a Higher Initial
Cost of Acquiring Bankrupt Assets - The creditors and stockhelders
of the bankrupt railroads are to be offered $422 million according
to the FSP. The U.S. Supreme Court has held that the creditors
may sue the U.S. Government for damages if they can prove the USRA
offer is less than the "constitutional minimum" they deserve.
Other estimates of the value of the bankrupts' properties are
$7.4 billion (by Penn-Central creditors assuming continued operation)
and $3.5 billion (by Penn-Central creditors assuming liquidation)
If any outcome above $422 million is reached, the Federal guarantee
to the creditors and stockholders would increase proportionally.
SUMMARY IMPACT
The impact of alternative assumptions on the projected
revenue and income of the system is summarized below.
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United States. Congress. Office of Technology Assessment. The Financial Viability of Conrail, report, September 1975; [Washington D.C.]. (https://digital.library.unt.edu/ark:/67531/metadc39342/m1/13/: accessed July 18, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.