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(Reuters) – U.S. railroad Union Pacific Corp (NYSE:UNP)’s chief executive expressed confidence on workers agreeing to a new tentative contract that was agreed last month, although he warned that they could still hold a strike.
“I remain confident that we’re going to get our temporary agreements ratified and be able to avoid a strike. That’s still a possibility, but I don’t think it’s a probability,” CEO Lance Fritz said on a post-earnings call on Thursday.
The comments by the CEO of the largest U.S. railroad by market value, with some 30,000 employees, come as members of a major union voted earlier this month to reject a deal that was brokered by President Joe Biden between U.S. railroads and unions.
A rail shutdown may freeze almost 30% of U.S. cargo shipment by weight, stoke inflation and cost the American economy as much as $2 billion per day.
So far, six unions have ratified the tentative contract, which provides for significant wage increases, but sticking points remain over issues such as working conditions and time-off for sickness.
Five unions are set to vote in the coming weeks over the new contract, which was agreed upon after more than two years of talks.
After members of the Brotherhood of Maintenance of Way Employees Division of the International Brotherhood of Teamsters (BMWED) rejected the contract earlier this month, the committee representing U.S. railroads on Wednesday rejected a new contract proposal from BMWED.
“The PEB’s (Presidential Emergency Board) recommendations remain the framework for an agreement,” said the National Carriers’ Conference Committee, which represents rails including Union Pacific, BNSF, CSX Corp (NASDAQ:CSX), Norfolk Southern (NYSE:NSC) and Kansas City Southern (NYSE:KSU).
The BMWED did not respond to a request for comment.
Union Pacific shares were down 4.1% after the company cut its volume forecast for the year on labor shortage and softening demand.
