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Is Harrison vital to a CP turnaround?

Hunter Harrison took aim at his detractors on Tuesday, saying he can transform the struggling railroad into an industry leader.

"With the right board and executive leadership, I believe Canadian Pacific can achieve just as dramatic a turnaround and enjoy its rightful position as a leader in the North American rail industry," he said in a statement released by CP Rail's largest shareholder Pershing Square.

"Together we can transform CP into the railroad its customers, employees and shareholders deserve."

Hunter's remarks came as the battle between Pershing Square -- which has acquired a 14.2-percent stake in the company since October -- and CP Rail's (CP-T) board intensifies over who should lead the company. Pershing Square's CEO Bill Ackman is hoping to oust current CEO Fred Green and replace him with former CN Rail (CNR-T) CEO Hunter Harrison.

Harrison was behind a dramatic turnaround at CN Rail that transformed the company into an industry leader.

But many analysts are skeptical about how much of an impact Harrison would have on CP Rail's operating performance.

"As good as he is and as unblemished as his track record is, we would still need to see the details on how they would try to accomplish their very aggressive goals," railroad expert Tony Hatch at ABH Consulting tells BNN. "CN Rail is incredible and in many ways Hunter is the one who shaped it, obviously there were others, it was a team effort…but we still need to see the plan."

Hatch says there needs to be a "cultural change" at CP Rail before the company can improve its performance.

Other analysts warn that while Harrison helped to streamline costs and improved scheduling, his changes were not always well-received.

"While there seems to be a euphoria around the operating ratio (and resulting EPS) CP could potentially reach, one has to remember the disgruntled customer base left in the wake of the drive for scheduled railroading [under Harrison's leadership]," Jacob Bout, an analyst at CIBC, said in a recent note to clients. "In bringing Mr. Harrison on board, there is a risk that the drive to efficiency may, in fact, send CP's customers to CN."

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