Freight needed to keep rail line open between Moncton and northern N.B.

Canadian National Railway slightly beat expectations as it earned net income of $555 million in the first quarter on a five per cent increase in revenues.

FREDERICTON -- Canadian National Railway (TSX:CNR) says it plans to close a 224-kilometre section of rail line between Moncton and northern New Brunswick unless new business can be found for the track, which also needs infrastructure upgrades.

Volumes on the line, which stretches between Irvco and Catamount, have dropped by 40 per cent over the last four years, Sean Finn, CN's executive vice-president of corporate services, told a news conference Thursday.

"The line in its current state -- both from business volumes and its capital requirements -- is not sustainable in the long term unless we see a major change in how the line is being used by our customers," Finn said.

He said up to $50 million needs to be spent on the line to maintain the service.

A committee has been in place since May to try to increase freight volumes on the line. The group includes CN, stakeholders and the provincial government.

"We will work diligently over the next 12 to 18 months with the province of New Brunswick to see if we can find ways to bring additional traffic to either the whole or part of the line, and we will work to see what are the specific capital requirements on that line to make it sustainable for the future," Finn said.

Irvco is about 32 kilometres west of Bathurst and Catamount is just west of Moncton.

Transportation Minister Claude Williams said the rail line is important for industries in northern New Brunswick.

The region has seen the closure of many large industries including pulp mills in recent years. The large Brunswick Mine near Bathurst, which produced zinc, lead, copper and silver, is scheduled to close next spring after 50 years in operation.

"Ensuring the appropriate infrastructure is in place for current and future industries in northern New Brunswick is an important part of our government's commitment to strengthening our regions and building a stronger province," Williams said.

Federal regulations don't allow CN to abandon the line before March 2014.

"We have ample time to turn this situation around," Williams said. "The discontinuance process can take 18 to 24 months and during this period, the rail line will continue to be in service."

CN says it will ensure passenger rail service between Montreal and Moncton can be maintained during that time.

Via Rail announced in June that it was cutting the frequency of its Montreal-to-Halifax route, which uses the line, to three round trips a week.

One of the available options is for the province to assume responsibility for the rail line, but Williams says that's not going to happen.

"I want to be very clear that the province of New Brunswick will not be the sole stakeholder dealing with the Newcastle line," he told reporters.

Brian Kenny, the Liberal critic for issues affecting northern New Brunswick, said the government already invests in roads and bridges and needs to be prepared to be part of a plan to keep the rail line open.

"If it does take government investment along with the federal government and private industry to get this thing working properly, then so be it," he said.

"All it seems this government does is committee after committee and study after study," Kenny said. "We need action on this to stimulate our economy."