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First publish date: 2004-05-11

UP Targeted by UTU Suit to Keep Management from Running Trains

Union Pacific Corp.'s largest union sued the biggest U.S. railroad to block the company from responding to a crew shortage by using managers to run trains.

The United Transportation Union's lawsuit says the company violated a 1985 agreement to promote UTU members who are conductors when engineer positions become available, union spokesman Frank Wilner said.

The union, which said it represents 14,500 Union Pacific workers, believes it has the right to strike over the issue if it fails to win an injunction, he said. Union Pacific has used more than 100 managers to help run locomotives and train new workers, without assigning those managers to serve as engineers, company spokeswoman Kathryn Blackwell said.

The Omaha, Neb.-based company doesn't believe it's violating the UTU contract and is training 400 conductors to become engineers in a six-month program, she said.

A ruling for the union "would have a negative impact on Union Pacific's current train operations, likely compounding its current crew shortage problem," said James Valentine, a Morgan Stanley analyst in Chicago, in an investor note. He rates the shares an "underweight" and doesn't own any.

The company last week said the crew shortage contributed to a 62 percent drop in first-quarter net income. Union Pacific said Friday in a U.S. filing that 1,000 train crew workers were hired last quarter and another 1,400 will be added this quarter.

The company has been hiring because of increased business and to replace employees who are retiring. Wilner said Union Pacific dragged its feet in hiring workers, especially between the 818-mile route between Los Angeles and El Paso, Texas, where the union has 2,100 members working on train crews. The railroad hasn't said when it expects to end delays caused by crew and equipment shortages, primarily between those cities.

Union Pacific has said delays and congestion added $90 million in costs last quarter. The company has said it will acquire as many as 270 locomotives this year and lease 350 more to boost a fleet that now numbers more than 7,000.

Union Pacific said in the regulatory filing that the net gain in train-crew workers this year, after retirements and resignations, will be about 1,300. That would be an increase of about 3 percent from the company's total of 46,838 employees shown in the filing as of March 31.

The union's lawsuit was filed in U.S. District Court in Oakland.


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