Canadian Pacific is preparing for a possible rail strike next month

Canadian Pacific Kansas City Ltd. is preparing for a possible strike by around 3,300 workers next month.

“As I see it, the positions haven’t changed much,” CEO Keith Creel told analysts on a conference call Wednesday.

“Of course you hope for the best, but you also have to be prepared for the worst.”

The possible work stoppage helps explain what Creel called a “responsibly conservative” forecast, which predicts only a slight increase in freight volumes this year.

“If the strike doesn't last as long as we might think – or if we don't have a strike at all – then we certainly have some potential,” the CEO said.

With 6,000 workers at rival Canadian National Railway Co. also in talks with their employer, there is a possibility of two rail work stoppages this spring that, combined, could bring virtually all freight rail service in Canada to a halt.

In February, CPKC and CN called on the federal labor minister to appoint an arbitrator to negotiate a new collective agreement for train conductors, engineers and shipyard workers. The notice of dispute pointed to a possible strike or lockout that could occur as early as May 22nd.

The Teamsters Canada Rail Conference said safety is at stake, claiming the country's two largest rail companies are aiming to remove all “safety-critical rest break provisions” from their collective bargaining agreements.

“That’s just not true, to put it bluntly,” Patrick Whitehead, CN’s chief network operating officer, said Tuesday.

Creel said Canadian Pacific offered workers a “win-win scenario.”

“But changes are needed. It takes leaders who are willing to see the wisdom in it and the benefit in it. And that hasn’t happened at this point,” he said.

On Wednesday, CPKC reported that first-quarter profit fell from a year earlier.

The Calgary-based operator said it had net income attributable to controlling shareholders of $775 million, or 83 cents per diluted share, for the quarter ended March 31. That's down from a profit of $800 million, or 86 cents per diluted share, a year earlier.

Canadian Pacific completed its acquisition of Kansas City Southern in December 2021, but had to wait until April last year to combine operations after the deal received regulatory approval.

CPKC said revenue totaled $3.52 billion in the most recent quarter, up from $2.27 billion in the year-ago quarter before the railroads merged.

The railroad said its core adjusted combined diluted earnings per share was 93 cents in the most recent quarter, up from 90 cents a year earlier.

This report by The Canadian Press was first published April 24, 2024.

Companies in this story: (TSX:CP)

Christopher Reynolds, The Canadian Press