Standard&Poor's Ratings Services' ratings on Omaha, Neb.-based Union Pacific Corp. reflect the favorable risk characteristics of the U.S. freight railroad industry, as well as the company's solid competitive position, moderate financial policies, and strong liquidity. Price competition from other railroads and trucking companies in selected commodities and the capital intensity of the industry somewhat offset these strengths. Given improving freight volumes, strong operating efficiency, and stable pricing trends, we expect Union Pacific to maintain satisfactory operating profitability and generate funds from operations (FFO) in the $4.5 billion-$4.8 billion range in 2010. We characterize the company's business risk as strong and financial risk as intermediate. Union Pacific operates a large rail network covering 23 states across the western U.S.
