Union Pacific Corp. (UNP) shares rose Tuesday after the railway operator said industry veteran Jim Vena would join the company later this month, less than two years after ending a four-decade career with rival Canadian National.
Vena, 60, will join Union Pacific on January 14 as chief operating officer, as well as executive vice-president, and will lead the company's "Unified Plan 2020" ambitions, which aim to reduce its operating ratio, a key industry measure for profitability, to at least 60%. Despite strong quarterly profits and a significant boost from last year's corporate tax cuts, Union Pacific axed nearly 500 employees and said more headcount reductions could follow as service and congestion issues on its rail network slowed earnings growth.
"Unified Plan 2020 combines precision scheduled railroading principles with our own UP Way tools and best practices," Union Pacific CEO Lance Fritz said in a statement. "We have been making excellent strides rolling out Unified Plan 2020, and Jim's vast knowledge of the precision scheduled railroading model brings significant experience and expertise that will enhance the work already underway."
Union Pacific shares gained $12.35, or 8.9%, on Tuesday to $151, which values the Omaha, Nebraska-based industrial at almost $111 billion.
BMO Capital Markets analyst Fadi Chamoun said Vena's appointment could help Union Pacific address its scheduling challenges and improve productivity and reduce costs, unlocking as much as $2.3 billion in added value.