CN Rail taps Ruest as CEO following service improvements

Interim boss officially handed the reins, will continue upgrading western network

MONTREAL— Canadian National Railway Co. named JeanJacques Ruest as president and chief executive officer, four months after he took over as interim leader amid service stumbles that tarnished the company’s vaunted efficiency.

Ruest, 63, will also join the board, the Montreal-based railroad said in a statement Tuesday. His appointment to the top job is effective immediately.

The 22-year Canadian Na- tional veteran has been rushing to improve performance after the railroad proved unable to accommodate a surge in freight starting in the second half of last year. Canadian National is spending a record $3.4 billion this year to fix bottlenecks by adding staff, tracks, sidings and locomotives.

“This announcement comes as expected and we view it as favourable as it brings continuity to the management team and the company,” Walter Spracklin, an analyst with RBC Capital Markets, said in a note to clients. “We expect the company will continue to improve its service, clear the backlog and realign costs in 2018.”

Shares have gained 16 per cent since Ruest’s interim appointment to replace Luc Jobin was announced March 5, compared with an 11 per cent increase for Canadian industrial stocks.

Total traffic at Canada’s biggest rail carrier is up 3.7 per cent since the start of the year, according to data from the Association of American Railroads compiled by Bloomberg. Carloads jumped 5.6 per cent to1.37 million in the second quarter, the data show.

In April, Canadian National cut its earnings forecast for 2018, saying the additional spending required to clear the logjams would weigh on profit. Adjusted earnings this year will be $5.10 to $5.25 a share, Canadian National said April 23, 15 cents lower at both ends than the previous projection.

Ruest “brought the team together to tackle the immediate operational and customer service challenges the company was facing since the fall of 2017,” chair Robert Pace said in the statement.

Investing in track capacity and locomotives, and adding train crews, is something that “we should have probably triggered back in April of last year,” the CEO told Bloomberg in an interview in April. “We delayed the decision at that point regarding capacity. In hindsight, it would have been a good time to start.”