Union Pacific Capacity Is Cut by Up to a Third

Union Pacific Corp. said Thursday that track damage from floods and washouts caused by punishing storms in California and Nevada might cut the number of trains serving Los Angeles by as many as a third for an “extended period.”

The nation’s largest railroad, which resumed service on two routes east from Los Angeles on Wednesday, is making arrangements for rerouting a portion of the 90 trains a day that typically operate in the region, spokeswoman Kathryn Blackwell said. The company didn’t give more specifics about the reduction in the number of trains or the duration of the disruption.

Union Pacific has been hurt by heavy rains since last month. The company is bringing in contractors as well as workers from other regions to repair tracks and signals. Union Pacific has struggled with a series of U.S. delays since late 2003.

The railroad still has no estimate of the financial effect of the Southern California flooding, Blackwell said. Union Pacific said the timing for restoring service on blocked routes depended on weather and the progress of repairs.

Union Pacific shares had their biggest one-day decline since March 2003, falling $1.97, or 3.1%, to $61.99 on the New York Stock Exchange. They have dropped 7.6% in the last 12 months.

The railroad has begun running trains between Los Angeles and Bakersfield as well as Los Angeles and El Paso to reach Chicago and other cities after almost all service in the area was stopped Tuesday. Two routes east of Los Angeles and one line north from that city remain closed. A total of 106 trains were being held Thursday.

One of Union Pacific’s two main lines from Southern California, which goes through Las Vegas and Salt Lake City, will be closed for “a matter of weeks, not days” because of washouts in a 70-mile stretch of track between those cities, Blackwell said.

Most of the damage is in the very narrow Caliente Canyon in Nevada, where all access roads were washed out and repair work will be very difficult, Union Pacific said.

The line averages 25 trains a day and is one of the two primary east-west routes between Los Angeles and the Midwest. They will be routed through Northern California before turning east.

In addition to the weather disruptions, the railroad said it would reduce service this year on the other main line from the region through El Paso to fix tracks.

The disruptions also affect Amtrak, whose trains between Los Angeles and Santa Barbara have been canceled for an unspecified period, Blackwell said. Amtrak uses Union Pacific tracks between those cities.

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Bloomberg News and Reuters were used in compiling this report.