(Bloomberg) — The chief executive officer of freight rail operator CSX Corp. is focused on generating returns from improved efficiency and performance — but he’s also open to merger prospects as industry rivals consolidate.
“I’m open to any path that can create shareholder value,” Steve Angel, president and CEO of CSX, said in an interview Thursday. Ancora Holdings Group took a stake in the company prior to Angel’s arrival in September, with the activist investment firm stating that the railroad should pursue a merger.
Angel acknowledged that the proposed $72 billion merger between peers Union Pacific Corp. and Norfolk Southern Corp. would create challenges — and opportunities — for Jacksonville, Florida-based CSX. The Surface Transportation Board has “all kinds of tools at their disposal” to examine the merger, he said. “So we need to see how this plays out.”
Asked if he had a preference on a merger partner, Angel said, “we have our view of that, but I’ll keep that one to myself.”
In the interim, he’s content to let the Union Pacific-Norfolk Southern merger approval process play out, noting that the STB’s approach is so extensive it was seemingly written to discourage consolidation. His first day on the job, he was given a brief. He said after reading it over, he thought, “Why would anybody attempt that? And the answer is, because who’s in the White House today.”
Angel, who developed a reputation as a skilled operator while CEO and then chair of industrial gas firm Linde Plc, is focused on improving shareholder returns that don’t require growth. “I love growth, but I trust costs,” he said.
He began his career at General Electric Co. in 1979, where he held a variety of management positions and was chair of Linde until earlier this year, having previously been CEO of the firm and its predecessor, Praxair Inc.
Early changes at CSX have included closing its aerospace division and selling its corporate jets, while cutting down on the use of consultants, canceling its family day appreciation event and other budgeting measures.
Changes have also been made to the management team, with Kevin Boone succeeding Sean Pelkey as chief financial officer in October. Riz Chand was brought in as chief human resources officer this month as chief administrative officer Diana Sorfleet retired.
Angel intends to create a culture of “continuous improvement,” making incremental changes in collaboration with staff, which features multiple unions. He noted his experience working with such groups at Linde.
“The union representation at CSX, they’re pretty smart people. So I think you have to have open communications with them. You’ve got to describe what’s going on in the business and what you’re trying to accomplish. And then you’ve got to find a way to do it together,” he said.
CSX has a rail network of around 20,000 miles of track across 26 states, the District of Columbia and the Canadian provinces of Ontario and Quebec, according to its website.
