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CSX Corp. (Nasdaq: CSX) CEO Hunter Harrison has died.
“It is with great sadness that we announce that E. Hunter Harrison, President and Chief Executive Officer of CSX, died today in Wellington, Fla., due to unexpectedly severe complications from a recent illness,” a CSX statement reads. “The entire CSX family mourns this loss. On behalf of our Board of Directors, management team and employees, we extend our deepest sympathies to Hunter’s family. Hunter was a larger-than-life figure who brought his remarkable passion, experience and energy in railroading to CSX.”
The 73-year-old railroad veteran took an unexpected medical leave Dec. 14 due to complications related to a recent illness. CSX has not released further details.
James Foote, who joined CSX as chief operating officer in October, was named acting CEO when Harrison took leave. Harrison had implied that Foote would be his successor during a Nov. 29 Credit Suisse conference, saying, “One of the steps in the succession was to bring Jim on.”
While expressing confidence in Foote, CSX Board Chairman Edward J. Kelly III noted the loss of Harrison was significant.
“With the passing of Hunter Harrison, CSX has suffered a major loss,” he said. “Notwithstanding that loss, the Board is confident that Jim Foote, as acting Chief Executive Officer, and the rest of the CSX team will capitalize on the changes that Hunter has made. The Board will continue to consider in a deliberative way how best to maximize CSX’s performance over the long term.”
Foote told investors he will continue Harrison’s plan to transition the Jacksonville-based railroad to a more efficient operating model called precision scheduled railroading. Foote worked alongside Harrison at Canadian National Railway, where the two implemented the same operating model.
“There is absolutely no change in plan here, no change in focus,” Foote told investors during a conference call Dec. 15. “We’re not slowing down… There’s going to be no slacking off, and we’re not going to take a step back from what we think we can execute.”
However, rail expert James Mourafetis told the Business Journal, CSX is more likely to see a hybrid than the full transition to precision schedule railroading. Mourafetis is senior vice president and asset management leader at Argo Consulting. He served as a consultant for CSX from 2010 to 2016 and assisted the railroad make operations more efficient prior to Harrison’s arrival.
“Since the new operating model and culture are not fully settled in yet, there is a high risk that the precision operating model will not be fully realized,” Mourafetis said by email. “Hunter’s implementation approach has been to personally create a mega disruption in a railroad’s culture and then later follow with replacing top management with his own disciples. That has not fully happened. And Hunter is Hunter, there is no other.”
After news of Harrison’s medical leave, an Edward Jones analyst told the Business Journal that he still recommended buying CSX stock.
“When Hunter left Canadian National and Canadian Pacific, the processes and people that he put in place stayed,” said Dan Sherman. “Those railroads improved after he left… Harrison was not finished with the transformation at CSX yet, but we’re confident the railroad will continue to get more efficient.”
Harrison joined CSX in March. Born in Memphis, Harrison worked in railroads since he was 19. He started as a carman-oiler for the St. Louis-San Francisco Railway, he worked his way up the ladder to CEO of Illinois Central, where he began with precision scheduled railroading. CN acquired that railroad in 1998, and Harrison brought his operating philosophy as the Canadian railroad’s chief operating officer and later CEO. He later implemented the operating model at CP as well. Both Canadian lines are among the most efficient in North America and are investor favorites.