CEO predicts continued Alaska Railroad economic upturn FREIGHT: Increases in the transfer of jet fuel, coal boost revenues.

Alaska Railroad Corp. CEO Christopher Aadnesen says he's expecting the railroad's economic recovery that began during fiscal 2009 to continue through the current fiscal year.

According to its fiscal year 2009 annual report, the state-owned railroad netted about $14 million in profits. That was an increase from the prior fiscal year when the railroad netted $12.5 million.

The railroad laid off 127 employees in 2009, but Aadnesen told the Alaska Journal of Commerce he doesn't think further cost-cutting will be needed.

"Most of the scaling back in this company has already been done," he said. "We're looking at productivity items. And productivity items allow better use of employees within the labor agreement."

Aadnesen said he is hoping to craft new labor agreements that will result in both higher productivity and higher wages for workers.

"We've had some good success with that, and we have no reason to believe that won't go on in the future," he said.

Much of the company's net revenue comes from its real estate holdings, explained railroad CFO Bill O'Leary. Freight and passenger service accounts for more than $106 million of the company's operating revenue of $143.6 million in 2009, but that revenue would not give the company a net profit on their own, Aadnesen said.

"Passenger service lines in the United States are almost always subsidized. They're losing propositions, from a net income standpoint," Aadnesen said.

The corporation owns more than 36,000 acres across Alaska, including land in the Healy area, which encompasses a large coal mine owned by Usibelli Coal Mine Inc.

The year 2008 was rough for the railroad, mostly because of low demand for the jet fuel the railroad transports from a refinery in North Pole to Ted Stevens Anchorage International Airport.

Flint Hills Resources, which owns the refinery, shut down its jet fuel processing unit in 2009 following a sharp decline in the number of flights connecting through Anchorage.

"That's a huge part of our business," Aadnesen said.

But recent increases in flights and cargo planes leaving Anchorage have increased the amount of fuel the refinery produces, and Flint Hills officials have indicated they would operate the processing unit through that summer.

"We are handling jet fuel as we speak, so it's not a complete loss of jet fuel. And they are projecting a higher level of production of that jet fuel this year compared to last year," Aadnesen said.

Hauling coal is also big business for the railroad. Aadnesen said there are two big markets for Alaska coal: exports to countries in regions like Asia, and power generation in Fairbanks and the military bases in the Interior region.

Aadnesen said shipments of coal from Healy to the port at Seward, where ships come to export it, have been increasing.

"The price of that coal, because of demand in the Asian markets and elsewhere, the price has gone up, so Usibelli is actively pursuing additional markets, and we're lucky enough to be the company that puts that coal into the position where they can put it on a ship and sell it," Aadnesen said.


Fisherman's Choice Charters