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March 1 (Reuters) - U.S. railroad operator CSX Corp said on Thursday it would stick with a plan started by former Chief Executive Hunter Harrison, who died in December, to boost profit through cutting jobs and rail cars.
Harrison, an investor favorite for leading turnarounds of Canada's two major railroads, died just eight months into a dramatic restructuring campaign that included slashing jobs, shutting multiple rail yards, mothballing locomotives and rail cars and running trains on tight schedules rather than based on customer needs.
The company outlined the details of its three-year plan at an investor meeting in New York.
CSX shares, up about 1 percent in Thursday trade, have surged about 50 percent since January 2017 and about 12 percent since March 2017 when Harrison took over as CEO following a high-stakes push by activist investor Paul Hilal of investment fund Mantle Ridge LP.
But the overhaul has triggered persistent complaints from shippers over service delays, crew and rail car shortages and higher freight costs, and drawn scrutiny from federal regulators.
The new CEO, Jim Foote, and his revamped management team reaffirmed that CSX would lower its operating ratio - a closely watched measure of operating expenses as a percentage of revenue to 60 percent by 2020 from 67.9 percent at year-end 2017.
"What are we here for? To make money," Foote told investors. "What are we trying to do? Drive efficiency, improve the network, improve the quality of our service, which will reduce our costs."
The Jacksonville, Florida-based railroad, the third-largest in the United States, said it would reduce its workforce by an estimated 2,200 jobs by the end of 2018 and another 4,000 in 2020 through cuts and attrition.
It also plans to cut the number of locomotives by up to 20 percent by 2020, while also reducing the number of rail cars it uses by more than 20 percent.
Several shippers have told Reuters that service has been improving from a nadir last summer, but problems persist. U.S. agricultural firm Cargill Inc and coal company Murray Energy Corp said crew and rail car shortages were causing delays as recently as last month.
CSX said it expects 4 percent average annual revenue growth in 2019 and 2020, driven by rising freight volumes and higher pricing.
CSX also said it could raise $800 million from selling off rail lines and real estate and would spend $4.8 billion on infrastructure and technology from 2018 through 2020. (Reporting by Eric M. Johnson in Seattle and Arunima Banerjee in Bengaluru; editing by Bernadette Baum, Jonathan Oatis and Ben Klayman)