CP Rail on hiring spree ahead of U.S. merger

Canadian Pacific Railway Ltd. is on a hiring spree as it awaits regulatory go-ahead for its acquisition of Kansas City Southern.

Discussing fourth-quarter financial results, CP’s CEO Keith Creel said the Calgary-headquartered railway is in growth mode as it awaits a decision by the U.S. Surface Transportation Board.

The ruling, expected sometime this quarter, is the final hurdle CP must clear in its bid to purchase KCS for $31 billion (U.S.) — a deal which would create the only singleline railroad linking the United States, Mexico and Canada.

In anticipation of a positive ruling and the growth opportunities that will result from the merger, Creel said CP started hiring in large numbers last spring.

“In spite of a historically tight labour market in ‘22, it was a record year of hiring at CP,” Creel said.

“We added more than 1,600 conductors over the course of last year, and we made some significant progress with our labour agreements.”

During the course of 2022, CP’s total workforce swelled to 13,000, an increase of seven per cent yearover-year.

“That was certainly a significant expense in 2022, and it will be a significant expense this year as we prepare for growth,” said chief financial officer Nadeem Velani. “Assuming a positive response from the STB, the synergies that we one day will realize will take some people. So we’re hiring a few thousand at a time, and we’re spending capex at record levels on our property and KCS on their properties.”

CP’s deal closed in December 2021, but the shares of KCS were placed into a voting trust that allows the U.S. railway to operate independently while the STB completes its review.

Mexican regulators have already given their approval to the deal.

CP has said its acquisition of KCS will enable significant growth for its rail customers, and allow for 60,000 truckloads annually to be shifted off public highways.

In addition to hiring, CP said it has also been working to ensure labour stability in advance of a finalized merger. CP recently announced a new tentative collective agreement with Unifor, the union that represents the railway’s mechanical employees in Canada, and has also reached an agreement with the union that represents the conductors for KCS in Kansas and Missouri.

All of the activity comes against the backdrop of an uncertain economic environment. This week, CP Rail said it earned $1.27 billion in the fourth quarter of 2022, compared with $532 million in the same period of 2021.