Railway icon Hunter Harrison has died

NEW YORK, Dec 16 (Reuters) – Hunter Harrison, former head of both major Canadian railways and most recently head of CSX Corp has died, the freight railway operator said on Saturday, just a few days after announcing that the veteran rail executive hired earlier this year to boost its profits had taken a medical leave of absence.

Harrison, 73, died “due to unexpectedly severe complications from a recent illness,” the company said in a statement, adding that he would be succeeded for now by acting CEO Jim Foote.

Harrison became towering figure in railroading when he headed Canadian National Railway and then Canadian Pacific Railway.

In both cases he undertook controversial reorganizations and cost cutting that made both carriers much leaner, efficient and more profitable. But the moves also led to shipper complaints and employee layoffs.

Harrison left CP in January to take over the helm of CSX.

CSX Corp’s shares fell three percent on Monday as Harrison’s death left investors worried about the No.3 U.S. railroad’s turnaround plan under acting CEO Jim Foote.

CSX shares have risen about 48 percent this year and about 6 percent since March 6, the day Harrison took over the reins at the company.

Memphis-born Harrison, 73, a railway icon known for turning around railroad companies, was in the midst of an overhaul to boost profits at CSX.

CSX chairman Edward Kelly said Harrison’s death was due to unexpectedly severe complications from a recent illness, calling it a major loss to the company.

The railroad company brushed off questions about whether the board had been slow to disclose Harrison’s health problems.

Seen using an oxygen tank when meeting investors last month, Harrison’s sudden medical leave was announced by the company on Thursday, sending its shares down about 10 percent on Friday.

In November, Harrison stopped short of laying out a succession plan for the company but said he was “trying to stay back a little bit” to give his management team space to steer through a major operations overhaul.

Acting CEO Foote has been with the company for just about two months, but is known to be well-versed with late Harrison’s working style from a previous job.

“The board’s greatest near-term challenge in building investor confidence is deepening CSX’s bench following the changes in 4Q,” Susquehanna Financial Group analyst Bascome Majors said in a note.

Foote’s hiring was announced in late October following the resignation of prominent female executives Chief Operating Officer Cindy Sanborn and Chief Marketing Officer Fredrik Eliasson.

Foote told investors on Friday he believes the “real heavy lifting has been done” and there will be “modifications and changes that we will make”.

“Even though Jim Foote is a capable leader we do not see him as the long-term solution as the CEO given his strength is marketing and the company is embarking on an operations focused turnaround,” Cowen and Company analyst Jason Seidl said in a note.

Cowen analyst believes CSX’s board will consider hiring current industry executives, especially those with a background in Harrison’s pet “precision scheduled railroading” method to improve railroad efficiencies.

CSX has been dogged for months with customer complaints, persistent service issues and increased federal scrutiny.

The company’s shares were marginally down at $52.58.

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