12.03
On Wednesday afternoon, CNR and the Teamsters Canada Rail Conference (TCRC) reached an agreement that would end the five-day strike and return ~1,700 locomotive engineers to work. The agreement with the labor union brings the railroad and the TCRC back to the table for mediation for a period of one week. During this time, the two parties will try to reach an agreement on work rules and pay and benefits. However, if an agreement is not reached, the parties will enter binding arbitration. If CNR and the TCRC do not reach an agreement within one week, they will go to arbitration to resolve the wage and benefit issues. JPM believes a 2% wage increase is the most likely outcome that would be favorable. JPM does not believe the strike had a meaningful impact on the stock over the last several days and so the resolution of the strike is unlikely to be a major driver of the stock. Nevertheless, JPM views the quick end to the strike as a positive for CNR because they avoid a more significant negative impact to their customer base. Although there was some disruption to CNR’s train service, CNR likely maintained ~70-80% of its normal train schedule over the past several days.
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