GATX Rail: Lease renewal pricing drops

GATX Corp. on Thursday reported Rail segment profit of $39.2 million in the fourth quarter of 2010, compared to $33.9 million in the fourth quarter of 2009, Rail segment profit was $150.6 million in 2010, compared to $169.1 million in 2009, a reduction that GATX said was driven by a decline in lease income “as there were fewer average active cars in the North American fleet and lease rates on renewals were generally lower throughout 2010.”

The company said that during the fourth quarter of 2010, lease renewal pricing on cars decreased 14.0% versus expiring lease rates, compared to a 15.7% decrease in the prior quarter and an 18.7% decrease in the fourth quarter of 2009.

On Dec. 31, GATX’s North American fleet totaled approximately 111,000 cars. Fleet utilization was 97.4 %, up from 96.8% at the end of the third quarter and 95.9% at year-end 2009. The European wholly owned tank car fleet totaled approximately 20,000 cars and utilization was 95.7%, up from 95.3% at the end of the third quarter and 94.7% at year-end 2009.

“In 2010, we focused on fleet utilization, cost containment and asset growth, and we executed in all three areas,” said Brian A. Kenney, president and chief executive officer of GATX. “We managed our maintenance and SG&A costs effectively, especially with the volatile rail market producing a high level of churn in our fleet. In addition, we successfully acquired a ninterest in approximately 8,000 existing railcars at attractive prices through two large transactions. In total, investment volume was $585 million in 2010, up significantly from 2009.”