CN to acquire 161 locomotives to handle expected traffic increases, improve operational efficiency

Will help meet growth and customer focused service plans

MONTREAL, March 22, 2012 /PRNewswire/ - CN (TSX: CNR) (NYSE: CNI) announced today a major locomotive acquisition program to accommodate anticipated traffic growth and to improve operational efficiency, enabling the railway to better serve its customers.

CN will acquire 65 new high-horsepower locomotives as well as 96 second-hand high-horsepower locomotives that will be upgraded.

Keith Creel, executive vice-president and chief operating officer, said: "CN's locomotive acquisition program represents a balanced, capital-effective approach to handle expected volume growth over the next two to five years and to meet the locomotive requirements resulting from customer focused service plans.

"The new and used motive power will enhance operational efficiency and reduce fuel consumption by permitting the retirement of older, high-maintenance locomotives and the cascading of less fuel-efficient main-line units into less-demanding yard and local switching operations, while providing additional locomotives to accommodate increased traffic."

CN will take delivery in 2013-14 of 35 new ES44AC locomotives from GE Transportation (GE), and 30 new SD70ACe locomotives from Electro-Motive Diesel (EMD). The GE units have 4,400 and the SD70ACe units 4,300 horsepower.

Creel added: "The program includes the acquisition of alternating-current locomotives (AC), which will represent a first for CN.  Our current fleet of approximately 1,900 locomotives employs direct-current (DC) traction technology, which has served us well because of the overall favourable grades of our network.

"We will harness the key advantage of AC traction - much higher adhesion or train-pulling ability at low speeds -- in assigning the new AC units to heavy-haul coal service in northern British Columbia and Alberta, where steep grades and sharp rail curvature make heavy demands on our locomotives."

CN will purchase this year 42 second-hand GE Dash 8-40C locomotives, 11 leased GE Dash 8-40C locomotives, and 43 second-hand EMD SD60 locomotives. The Dash 8 units have 4,000 and the SD60s 3,800 horsepower. These direct-current technology locomotives will be upgraded to CN specifications.

The new locomotives CN is purchasing are equipped with distributed power technology (DP), a GE product, which improves train handling and fuel efficiency. The company expects that 50 per cent of its high-horsepower locomotive fleet will have DP by the end of 2013.

DP technology permits remote control of a locomotive or locomotives throughout a train from the lead control unit. DP provides faster, smoother train starts, improved braking and lower pulling forces at the head-end and within a train, contributing significantly to improved safety. With more optimum matching of motive power to train weight, DP locomotives also allow CN to reduce fuel consumption and reduce emissions.

Creel said: "A robust, fuel-efficient locomotive fleet is critical to CN's plan to take advantage of the traffic growth we expect in the years ahead and to ensure we have the motive-power assets to improve the supply chains of our customers and enhance their competitiveness in domestic and global markets."

CN - Canadian National Railway Company and its operating railway subsidiaries - spans Canada and mid-America, from the Atlantic and Pacific oceans to the Gulf of Mexico, serving the ports of Vancouver, Prince Rupert, B.C., Montreal, Halifax, New Orleans, and Mobile, Ala., and the key metropolitan areas of Toronto, Buffalo, Chicago, Detroit, Duluth, Minn./Superior, Wis., Green Bay, Wis., Minneapolis/St. Paul, Memphis, and Jackson, Miss., with connections to all points in North America. For more information on CN, visit the company's website at www.cn.ca.

Forward-Looking Statements

Certain information included in this news release constitutes "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and under Canadian securities laws. CN cautions that, by their nature, these forward-looking statements, including statements relating to anticipated traffic growth, involve risks, uncertainties and assumptions. The Company cautions that its assumptions may not materialize and that current economic conditions render such assumptions, although reasonable at the time they were made, subject to greater uncertainty. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the actual results or performance of the Company or the rail industry to be materially different from the outlook or any future results or performance implied by such statements.

Important risk factors that could affect the forward-looking statements include, but are not limited to, the effects of general economic and business conditions, industry competition, inflation, currency and interest rate fluctuations, changes in fuel prices, legislative and/or regulatory developments, compliance with environmental laws and regulations, actions by regulators, various events which could disrupt operations, including natural events such as severe weather, droughts, floods and earthquakes, labor negotiations and disruptions, environmental claims, uncertainties of investigations, proceedings or other types of claims and litigation, risks and liabilities arising from derailments, and other risks detailed from time to time in reports filed by CN with securities regulators in Canada and the United States. Reference should be made to "Management's Discussion and Analysis" in CN's annual and interim reports, Annual Information Form and Form 40-F filed with Canadian and U.S. securities regulators, available on CN's website, for a summary of major risks.

CN assumes no obligation to update or revise forward-looking statements to reflect future events, changes in circumstances, or changes in beliefs, unless required by applicable Canadian securities laws. In the event CN does update any forward-looking statement, no inference should be made that CN will make additional updates with respect to that statement, related maters, or any other forward-looking statement.

SOURCE CN