Transport 2000 Canada Hotline #529, December 23, 1999

Headlines:

BNSF CN Merger
Air Canada Acquires Canadian
New Discount Airline
Salt Lake City LRT Opens

Details:

BNSF CN Rail Merger

Canadian National will join with Burlington Northern to create the largest
railroad in North America worth $28 billion, with 84,000 kilometres of
track, 67,000 people and $18.5 billion in annual revenues.

CN has just finished acquiring Illinois Central which gave it one line
service from the Atlantic and Pacific Coasts to the Gulf of Mexico. The BNSF
CN merger will create a truly North American railroad that links Halifax and
the Ontario/Michigan auto trade with the Southwest U.S.

The CN BN union will put competitive pressure on CPR to link up with a large
U.S. railroad, probably the Union Pacific. The next logical phase of mergers
would be for BNCN to link with either Norfolk Southern or CSX, with UP
linking to the other eastern railroad.

CN and BN are promoting this transanction as an end-to-end merger that will
not lessen competition because there is little overlap in the BN and CN
networks. This would also mean less impact on employees. Early reactions
from shippers indicate their main concern is a repeat of service disruptions
that have followed the UP SP union and the division of Conrail. CN and BN
state they have completed similar transactions in the past without serious
problems.

The new North American railway would be a companion corporation to CN. CN
would provide six directors, BN six and there would be three other
individuals. On balance, the majority of Board members would be Canadian
residents. BNSF would be a wholly owned subsidiary of the North American
Railway.

Air Canada Acquires Canadian

The Federal Government has approved Air Canada's proposed takeover of
financially troubled Canadian Airlines. The airline has promised to maintain
service to smaller communities, protect jobs and help boost competition
among regional airlines. The Government is expected to pass legislation
giving it power to regulate fares if necessary. Similar powers were removed
during deregulation.

Under the agreement between the Competition Bureau and the Government, Air
Canada will continue providing service for at least three years to all
communities currently service by Air Canada, Canadian or affiliates. Ensure
no layoffs at Air Canada or Canadian for two years. Delay plans to launch an
Air Canada discount airline in the east. Put Canadian Regional up for sale.
Surrender slots at Pearson Airport to other airlines.

East Gets New Discount Airline

Industrialist Ken Rowe has announced he will start up a new discount airline
in Eastern Canada by May 1, 2000. The new airline, which will be called
Canjet, will use 20 Boeing 737's and operate between Hamilton, Montreal,
Ottawa and Halifax as well as some points in the U.S. The Federal Government
created room for this venture by preventing Air Canada from starting a
discount airline in the East until Sept, 2000. This block to Air Canada will
be extended to Sept, 2001 if Rowe's airline gets off the ground.

West Jet is also considering expanding into the East. Meanwhile,
Inter-Canadian, a discount airline operating in Quebec and Atlantic Canada,
has gone out of business. And Air Canada has agreed to sell off the assets
of Canadian Regional Airlines which has about 51 airplanes.
Salt Lake City LRT

The TRAX light rail system in Salt Lake City has opened with great ridership
success. The length of trains in the evening has been increased and evening
runs operate more frequently, 15 minutes apart. Daily ridership is reported
to be well above the 14 000 passengers per day projected.