CN's Transcona Shops Win Work to Upgrade Freight Cars, Locomotives for Two Leasing Companies.

WINNIPEG, Manitoba--(BUSINESS WIRE)--May 27, 1999--

Canadian National (NYSE:CNI) (ME:CNR.) (TSE:CNR.) announced today its Transcona maintenance shops are overhauling freight car equipment and locomotives under two contracts CN signed with U.S. rail equipment lessors.

"This is excellent news for employees at our Transcona Shops," said Dennis Waller, CN's vice-president, engineering and mechanical. "Our employees' skills and experience make them ideally suited to perform high-quality work for major rail industry suppliers."

The first contract calls for Transcona Shops to refurbish 290 gondola cars for Progress Rail, an Albertville, Ala.-based company specializing in rail car leasing and repairs and the scrap metal trade.

Almost 180 CN employees are working on the gondola car rehabilitation. The work, which began in April, consists of rebuilding the structure of the cars and major car components (wheels, brakes, etc.). Progress Rail will take delivery of the first 65 cars in early June and the remainder by the end of July.

A second contract with San Francisco-based Locomotive Leasing Partners (LLP) involves Transcona Shops upgrading 22 GP38AC locomotives to GP38-3 specifications. The locomotives were acquired by LLP from CN.

More than 100 CN employees are involved in the locomotive program. Transcona will upgrade locomotive electrical system, diesel engines and traction systems. The first overhauled locomotive will be delivered to LLP in August and the remaining units will be delivered at a rate of one per week.

Sameh Fahmy, CN's assistant vice-president, supply management, said: "CN is increasingly looking for contract work that its shop forces can do efficiently. We want more business where our rail industry supplier also are our customers."

CN worked closely with the Canadian Auto Workers union to secure the Progress Rail and LLP contracts.

"CN-CAW cooperation was essential to win these contracts, and this type of cooperation sets a solid framework for the future," Waller said. "The Company and the union share a common goal: to prove to rail equipment manufacturers that Transcona employees are true professionals who can deliver quality products at competitive rates."

Canadian National Railway Company serves all of Canada and the U.S. Midwest, including the ports of Vancouver, Montreal and Halifax, and the key cities of Toronto, Chicago, Detroit and Buffalo, with connections to all points in North America.