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Author Topic: Pacific Air Line - Eastern Pacific Merger: 20 Years Later  (Read 1438 times)

Offline TrainFreak1994

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Pacific Air Line - Eastern Pacific Merger: 20 Years Later
« on: July 01, 2016, 04:28:08 AM »
Two important dates are approaching faster than you know Those days are June 30, 2016 and July 1, 2016. The former is Pacific Air Line's last day of operation and the latter being legally merged out of existence following finalization of the blockbuster deal (July 1). A grand total of 20 years will have passe since the merger was enacted. June 30, 1996 and July 1, 1996 have since long passed but this merger's impact and the legacy of both railroads have been and continue to be shaped by this deal. Though the Pacific Air Line is no longer in business, its successor Eastern Pacific has continued to maintain its "stalwart" and "powerhouse" reputation as a class I major carrier in the United States.

The Pacific Air Line was formed on April 4, 1968 with a consolidation of Dalembert Great Plains (DGP), St. James & Central Plains (SJCP), Gomez & Midwestern (GMW), and the Northern Railway (NOR). Eastern Pacific on the other hand, had only came about on February 18, 1990 after Mixondale, Lawson Heights & Southern (MLHS) and Chandleville Western (CW) agreed to consolidate their operations into one brand new network. Both companies were responsible for a combined five mergers between 1982 and 1986 (one per year to be exact). Pacific Air Line had a vast coal and mineral network while Eastern Pacific had a formidable intermodal system in place.

In spite of the new mega carrier being put on the table for talks, very few believed that it would be up for serious consideration. Eastern Pacific president William Howe said, "it certainly looked like a longshot for the merger to go through. A lot of teetering had to be done for any reasonable chance that a vote to approve the merger would happen. Give everyone who was involved in ensuring the merger's successful execution credit. They had an incredibly difficult job to do and it was a miracle for the merger to be pulled off." Nearly 2/3 of Pacific Air Line's network was sold or spun off just to get the competitors to ease off of both companies. Eastmont Northern had the very modest opposition since they were involved in merger talks of their own with Pacific Air Lines and most notably the Meadowview Eastern since they merged two years later in 1998. Javarrington Pacific offered the stiffest objection to both companies while Meadowview Eastern wanted concession as a condition of their approving nod.

Despite the merger plan other ideas were up for discussion. An EP-PAL, EP-JP, EN-EP-ME proposal was made but differences and preferences in how the merger should be put together grounded any serious consideration. Another one as a ME-PAL, EN-JP but EP objected since they were the odd man out. A third and final one was EP-ME, EN-PAL, EP-PAL-JP but EN and PAL had disagreements about who the surviving company should be. PAL also had issues with compensation for JP being split into the EP and PAL. Nevertheless the EP-PAL merger was announced in June 1994, approved in May 1995 and executed on July 1, 1996 \1996, EN-ME by 1998 and EN-JP in 2002.

Today Eastern Pacific and Eastmont Northern are neck-in-neck in terms of route mileage (38,800 and 40,400 miles respectively), and competition. The EP-PAL combination ended up working out great. The merger surprised everyone including the merging partners. It's been 20 years since the merger took place but Eastern Pacific managed to ace two deals in a span of six years, neither being easy to pull off. While much has changed since 1996 the shock and awe of the megadeal has yet to subsiude and neither has EP's status as a premier class I major carrier in North America.