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CP’s Green promises results to ward off Ackman

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Canadian Pacific Railway Ltd. (CP-T) chief executive officer Fred Green said the company is accelerating its strategic overhaul and expects to sharply improve the freight carrier's operating performance within three years.

In a letter to employees Friday, CP's Fred Green said the company's board has met recently with a number of its shareholders to reassure them that it is "holding all employees accountable" to deliver on a plan to bring the railway's operating performance in line with its peers.

CP ranks as the least efficient of North American's Big Six railways with operating costs equalling 82.4 percent of its revenue in the first nine months of 2011. Green said in his letter that "we have the right plan in place to achieve an operating ratio in the low 70s in the next three years, with further benefits to be realized in 2015 and beyond."

New York activist Bill Ackman and his hedge fund Pershing Square Capital Management have launched a proxy contest to elect a minority of new directors at CP and replace Green with Hunter Harrison, the former CEO of Canadian National Railway Co., the industry's most efficient freight carrier.

Green said "contrary to what Pershing Square has stated," it is not possible for the CP to lower its operating ratio to 65 percent by 2015.

"This pace of improvement, from this starting point, has never been achieved by any railway management team. In fact, it took Hunter Harrison seven years to lower CN's OR from 75 to 65 during a strong economic period and one in which CN significantly grew revenues through acquisitions," he said.

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