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New Owner of MMA Railway Vows Safer, More Profitable Service

Courtesy Transportation Safety Board of Canada

BANGOR, Maine - The new owner of the former Montreal, Maine and Atlantic Railway is vowing to run a profitable, efficient and safe railroad by 2015. Fortress Investment Group paid $15 million to acquire the track and other assets, after the Lac Megantic disaster drove the MMA into bankruptcy. Key Maine industries have a lot at stake in the new company and its leader, John Giles.

John Giles career as a railroad man did not begin in an executive suite. Giles grew up in the industry, working as a locomotive fireman and engineer during summers in the Midwest, before eventually running his own train between Indiana, Illinois, at just 21 years old.

After a long career at CSX, Giles retired in 1999. Since then, he's successfully turned around underperforming railroads in Washington state, the Midwest and southern Florida, as head of Rail America. Now, he faces a more complicated challenge - one he says he's been reminded of in recent months by "my almost countless trips to Megantic to discuss, with the mayoress and her team, how we think about safety and railroading."

It's been just over 14 months since an MMA oil train derailed in Lac Megantic, causing a fire that consumed part of the city's downtown and killed 47 people. If not for this tragedy, Giles wouldn't be standing in this hotel ballroom full of business leaders in Bangor, outlining his plans for the new Central Maine and Quebec Railway.

So, not surprisingly, Giles begins with his track record on safety. "The short line standard for safety is something called the Jake Award - J-A-K-E. In our six years at Rail America, we won 202 Jake Awards," he said.

To ensure that the new railway carries on this tradition, Giles and his team are trying to minimize risks that their cash-strapped predecessors couldn't afford to address. They have been racing to replace deteriorating track and railroad ties before the ground freezes. It's part of a $10 million capital improvement effort, designed to achieve another milestone that eluded the old MMA: annual profitability.

As part of this effort, Central Maine and Quebec got rid of 40 old MMA locomotives and brought in 20 newer models. "So we now have a fleet that's far more reliable, far more fuel efficient," Giles said. "We're actually consuming 50 percent of the amount of fuel that former MMA locomotives consumed."

Giles says these improvements will allow Central Maine and Quebec trains to speed up, from 10 mph to a 25 mph. That's a key upgrade for businesses in Maine that want to ship their goods more quickly to another freight line in Quebec or to a cargo ship at Mack Point in Searsport.

John Henry Cashwell III, who runs a forest management consulting firm, liked what Giles had to say. "Forest products are high volume, high weight and low value. So the rail, in many ways, is a real opportunity to efficiently move those things," Cashwell says.

Giles says there's enough existing business in Maine to begin turning a profit.  But Chop Hardenbergh says the struggles faced by previous owners raises questions for Central Maine and Quebec that don't have easy answers. Hardenbergh edits the newsletter Atlantic Northeast Rails and Ports. "You're looking at a railroad that has no business between Brownville and Jackman in Maine. It's just one big empty stretch of track," he says.

It's part of the reason why, in the months before Lac Megantic, the MMA had begun transporting oil from the Bakken fields in North Dakota to the Irving refinery in Saint John, New Brunswick. Giles says Central Maine and Quebec doesn't have any plans to resume oil shipments in the near term, but may do so down the line.

"You don't get to chose whether you want to haul pillows or feathers or dangerous goods," he says. "There's a lot of commodities I'd like not to handle. I don't have the privilege. You're a common carrier, you've got to haul them."

In the coming weeks, Giles and his team will travel by RV to small towns along the rail line, where they'll stop and talk with local officials and residents about their plans for the new railroad.