Norfolk Southern faces significant financial risks stemming from the East Palestine train derailment. Accrued liabilities for environmental cleanup, remediation, and legal proceedings total hundreds of millions of dollars. Ongoing investigations and potential fines or penalties add uncertainty. The company also faces potential losses from various lawsuits and claims related to the incident, including a class action settlement. Uncertainties in the outcome of legal proceedings and regulatory matters could lead to additional costs. Future environmental liabilities are also a concern.
Financial Upside
Norfolk Southern experienced a significant increase in net income and earnings per share in the third quarter and first nine months of 2024. This was driven by lower operating expenses, including gains from railway line sales, and insurance recoveries exceeding incremental expenses related to the East Palestine incident. Increased volumes and higher average revenue per unit for some commodities also contributed to the positive results. The company has substantial borrowing capacity and access to additional financing.
