Canadian National Rail to buy locomotive fleet

TORONTO (Reuters) - Canadian National Railway Co CNR.TO said on Thursday it would buy dozens of fuel-efficient locomotives to haul coal over the steep grades of Western Canada.

All told, Montreal-based CN, the country’s largest railway, will acquire 65 new and 96 second-hand locomotives for an undisclosed price to handle heavier traffic it expects over the next two to five years.

The new engines are alternating-current locomotives that are able to pull trains at low speeds, making them suitable to haul coal in northern British Columbia and Alberta, where steep grades put heavy demands on equipment.

The railway’s current fleet of 1,900 engines use direct current technology.

CN's smaller rival, Canadian Pacific Railway CP.TO, has the bulk of its Canadian track in western Canada, where it also hauls coal.

CN said it will take delivery in 2013-2014 of 35 new ES44AC locomotives from GE Transportation GE.N and 30 new SD70ACe trains from Electro-Motive Diesel.

The new trains are also equipped with distributed power technology, which improves handling and fuel efficiency. By the end of 2012, CN expects that 50 percent of its high-horsepower fleet will have distributed power.

In addition, the railway this year will buy 42 used GE Dash 8-40C trains, 11 leased GE Dash 8-40C locomotives and 43 second-hand EMD SD60 trains, all of which will be upgraded.

CN shares declined 1.4 percent to close at C$77.75 on the Toronto Stock Exchange on Thursday as the broad market fell.

Reporting by Susan Taylor, Editing by Frank McGurty