Union Pacific (NYSE: UNP) and Westinghouse Air Brake Technologies Corporation (NYSE:WAB) shares are surging on Wednesday after the companies penned a deal for the largest locomotive modernization investment in rail industry history.
The companies inked a deal for $1.2 billion to modernize the railroad’s AC4400 locomotives.
Details
Signed in the fourth quarter of 2025, this deal represents Union Pacific's fourth major modernization order with WAB since 2018.
Once complete, the railroad's fleet will include over 1,700 modernized locomotives. The production will take place at Wabtec's U.S. facilities, with deliveries starting in 2027.
This landmark deal builds on Union Pacific’s previous 2022 order, which is scheduled to be completed in 2026.
Benefits
The upgraded fleet is expected to aid in enhancing the railroad’s operational efficiency, service reliability, and network performance.
WAB's modernization program is projected to extend the lifespan of each locomotive, enhance fleet standardization, and enable Union Pacific to leverage next-generation control and diagnostics technologies.
The upgrades are expected to cut fuel consumption by over 5%, boost tractive effort by 14%, and improve reliability by 80%.
Union Pacific’s Subpar Earnings Results
Last month, Union Pacific reported fourth-quarter adjusted EPS of $2.86, which missed the analyst estimate of $2.87, and operating revenue decreased 1% to $6.09 billion, missing the analyst estimate of $6.12 billion.
The company reported an operating ratio (OR) of 60.5%, 180 basis points worse, and the adjusted OR was 60.0%, 190 basis points worse.
Price Action: Union Pacific shares were up 2.78% at $248.20 and Westinghouse Air Brake shares were up 1.33% at $239.41 at the time of publication on Wednesday, according to Benzinga Pro data.
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