Norfolk Rail Firm Favored as Conrail Buyer

The Norfolk Southern Railroad has become the solid favorite of the Transportation Department to purchase Conrail, government and industry sources said today, But the department insisted that no decision has been made.

“Norfolk Southern certainly is in the No. 1 spot right now,” said one government source, speaking on the condition that he not be named.

But the source added that Transportation Secretary Elizabeth Hanford Dole still wants to hear from Conrail employees and that “obviously the apple cart can be overturned.”

A labor task force representing Conrail’s 35,000 employees has scheduled meetings with the prospective buyers of the railroad next week and will then decide which proposal it will endorse.

‘3 Bids on Table The New York Times in today’s editions quoted unnamed railroad, investment and government sources as saying the expected announcement of Norfolk Southern as the purchaser of Conrail for $1.2 billion and other considerations might come this week and, at the latest, by the end of the month.

John Riley, head of the Federal Railroad Administration, insisted that no decision on a purchaser has been made. Dole “has not made a decision. . . .She has not narrowed her option; she has three bids on the table,” Riley said.

The three bidders that have been in the running to by the government’s 85% interest in Conrail are Norfolk Southern; Alleghany Corp., a New York corporation with a history of railroad ownership, and hotel owner J. Willard Marriott Jr. .