The purpose of this study was to determine whether passenger train car net rentals would be changed and how many passenger train cars would be released as a result of merger and the related estimated savings to be expected.
The Erie owns 569 passenger train cars and the Lackawanna ownership is 790 cars. Many of the Erie and Lackawanna cars are used in New Jersey commuter service, and they would not be affected by merger. The number of cars which would be released as a part of Study XXI, Competitive Passenger Train Service was estimated at 36 including 26 mail and express, four RPO, three coaches, two buffet cars and one dining car.
The analysis disclosed that there would not be any savings resulting from reduced leasing of equipment from other railroads, nor would there be any increased opportunity to lease out system cars during slack periods. This is due to the fact that the peak demands for equipment on both roads occur at about the same time and there have been very few requests from adjacent roads to lease equipment when a surplus was available.
All of the cars released would be heavy-weight conventional cars, and the estimated savings from release of passenger train cars are as follows:
A. Net Cash Realized
1. Salvage value of 36 cars released $44,055
2. Net Cash Realized $44,055
B. Estimated Savings in Expense
1. 5% Interest on $44,055 $ 2,203
2. Annual depreciation 36 cars 13,140
3. Cost of heating while standing
(Note A) 1,050
4. Estimated Annual Saving $16,393
Note A: Cost of heating calculated for 10 cars for eight hours per day, five
months per year, 125 pounds of steam per hour per car at 700 per 1,000
pounds.
