July 19 (Bloomberg) -- Montreal, Maine & Atlantic Railway Ltd. is evaluating whether the company remains viable after the July 6 crash of one of its trains in Quebec that killed as many as 47 people, Chairman Ed Burkhardt said.
“Whether we can survive is a complex question,” he said today in a telephone interview from the Rosemont, Illinois, offices of Rail World Inc., the closely held company’s parent. “We’re trying to analyze that right now.”
Burkhardt, who also is chief executive officer of the parent, had said in a July 11 interview that he thought the railway would survive and that it was “pressing up against the limits of our insurance but not exceeding it.”
A Montreal, Maine & Atlantic train hauling crude oil rolled from its parking spot and crashed in Lac-Megantic, Quebec, incinerating 30 buildings. The engineer responsible for the train may not have set enough hand brakes to secure it before he left for his hotel that evening, Burkhardt said last week. The brakes weren’t applied with sufficient force to hold the train, Canada’s Transportation Safety Board said today.
There have been 42 confirmed deaths, and Quebec police said today the toll may reach 47. The crash was the nation’s worst rail disaster since 1910, when about 63 people were killed in a derailment in Spanish River, Ontario, according to the Canadian Disaster Database.
“Judging from similar accidents and the number of people killed, the number of businesses annihilated and those that are losing business, as well as the environmental factors, it will probably cost upwards of $100 million,” Chris Damas, an analyst at BCMI Research in Barrie, Ontario, said in a telephone interview. “This kind of small railway likely doesn’t have $100 million in its safe.”
Damas said he asked for Montreal, Maine & Atlantic’s financial information, and hasn’t been granted access. Losses for insurers could include death benefits, business-interruption costs and expenses tied to replacing damaged property, as well as environmental cleanup, he said.
XL Group Plc said on July 10 that it is among insurers of the railroad.
A motion to file a class-action lawsuit on behalf of the residents of Lac-Megantic in Quebec Superior Court in Sherbrooke names Burkhardt as a defendant. Montreal, Maine & Atlantic; Robert Grindrod, the railway’s president; and Tom Harding, the train’s operator, are also among those listed in the motion.
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