Union Pacific Shares Spike as Rail Industry Veteran Jim Vena Named New COO

Union Pacific Corp. (UNP) shares were indicated sharply higher in pre-market trading Tuesday after the railway operator said industry veteran Jim Vena would join the company later this month, less than two years after ending a four decade career with rival Canadian National. 

Vena, 60, will join Union Pacific on January 14 as chief operating officer, as well as executive vice-president, and will lead the company’s “Unified Plan 2020” ambitions, which aim to reduce its operating ratio, a key industry measure for profitability, to at least 60%. Despite strong quarterly profits and a significant boost from last year’s corporate tax cuts, Union Pacific axed nearly 500 employees and said more headcount reductions could follow as service and congestion issues on its rail network slowed earnings growth. 

“Unified Plan 2020 combines precision scheduled railroading principles with our own UP Way tools and best practices,” Union Pacific CEO Lance Fritz said in a statement. “We have been making excellent strides rolling out Unified Plan 2020, and Jim’s vast knowledge of the precision scheduled railroading model brings significant experience and expertise that will enhance the work already underway.”

Union Pacific shares were marked 6.9% higher in pre-market trading Tuesday, indicating an opening bell price of $148.20 each, a move that would trim the stock’s three month decline to around 9.9% and value the Omaha, Nebraska-based industrial at just under $110 billion.

BMO Capital Markets analyst Fadi Chamoun said Vena’s appointment could help Union Pacific address its scheduling challenges and improve productivity and reduce costs, unlocking as much as $2.3 billion in added value. “We believe that Jim Vena could be instrumental in helping UNP push forward with its Unified Plan 2020, which aims principally to improve operational efficiency through the implementation of (precision scheduled railroading (PSR),” Chamoun said. “Operational improvements could materialize faster under Vena’s leadership as he brings to bear his extensive experience in PSR.”

Story by Martin Baccardax for the street.com

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