carrier was unsuccessful in the Billings-Alliance case, by no means establishes that the removal was initiated by the carrier. For the past year, the carrier has upgraded the equipment assigned to the trains and has advertised the service in the press and on the radio. There was no apparent response in terms of traffic and revenues. The carrier considers that it has come to the end of the road with these trains and that there is no other possible economy which can be made in their operation.

Financial results of operating the trains.-The carrier's testimony and exhibits entered on the record for the 2 years and 6 months previously referred to, show total revenues of $1,410,984, $1,209,910, and $383,171. Out-of-pocket expenses are shown as $1,703,350, $1,841,872, and $838,413 and net losses as $292,366, $631,962, and $455,242. According to the carrier, projected results of operating a train for a 1-year period, after adjusting the foregoing 6 months results for loss of all express revenues and the necessity for the bearing of the baggageman expense solely by the carrier, would be total revenues $688,446, out-of-pocket expenses $1,620,235, and net loss $931,789.

Included in the out-of-pocket expenses for the three past periods were items for diesel locomotive repairs $171,946, $224,505, and $96,982; water, lubrication, and other supplies $16,884, $17,684, and $7,546; enginehouse expenses $41,902, $48,507, and $21,070; and passenger car repairs $145,640, $115,260, and $40,691. Upon questioning by the hearing examiner, the carrier admitted that the foregoing are not entirely out-of-pocket costs, inasmuch as they contain certain overhead (or allocated) expenses that would not immediately be saved in the event the trains are discontinued. The nonsavable overhead expenses admittedly amount to approximately 20 percent of the total costs for these items. We have reduced them by that amount in our computations for the past periods and for the projected year.

The record contains no evidence on the feeder value of the trains for the years 1966 and 1967. For the first 6 months of 1968, feeder revenues totalled $15,208. Computing the expenses related to such revenues at 50 percent, in accordance with the formula ordinarily employed in train discontinuance cases, will result in a feeder value for the two trains of $7,604, or 4 percent of the total revenues for the first 6 months of 1968. Using a 4-percent factor for the years 1966 and 1967, indicates feeder values of $28,219 and $24,198 for those years. Because feeder traffic is an integral part of the operation, the estimate of the trains' revenues

should contain feeder revenues, and the out-of-pocket expenses should include the expenses associated with the production of feeder revenues. To reflect these factors we are deducting from the carrier's net loss estimates, amounts equal to the feeder value for each of the three periods.

After adjusting the carrier's financial results in accordance with the foregoing discussion, the net losses incurred in the trains' operation for the 2 years and the 6-month period would be $198,873, $526,574, and $414,381. For the 1 year projected results the net loss would be $844,363. The carrier claims to be in a deficit position in regard to 1967 income taxes and anticipates the same position in 1968. Accordingly, it does not foresee any effect on its income tax liability if the trains are discontinued. The financial results of operating the trains for each of the 2 years and the 6-month period, in detail, are:

The projected results of a year's operation after making the necessary adjustments in the carrier's estimate, would be:

Method of computing financial results.- Passenger revenues in the foregoing financial results are computed by applying system average revenue per train-mile to the total revenue train-miles actually traveled by each passenger. Mail revenues are actual. Express revenue is computed on the rates per car-foot mile applied to the express car-foot miles utilized by the trains. Newspaper revenues are derived by applying newspaper tariff rates to the average volume of newspapers handled. Milk revenues are derived by applying appropriate rates to the actual number of milk cans handled on the trains. Baggage revenues are computed in the same manner as passenger revenues. Dining car revenues are the proportion of such revenues accruing to the trains from operation of special dining car service. The freight revenues are those actually accruing for operating Air Force Simulator Cars subject to freight charges on carload basis under U.S. Government bills of lading.

Expenses for wages and lodging and meals are the amounts actually paid in connection with those items. The amount of wages paid to incumbents of positions to be abolished must be acknowledged as an out-of-pocket cost of operating the trains and a necessary factor in computing the out-of-pocket deficit of past and future operation. They do not necessarily represent, however, the amount that could be saved as the result of discontinuing the trains. By virtue of seniority rights, the traincrew and enginecrew could displace junior employees; and to the extent the latter are released from service, the amount of their wages would actually be saved by the carrier. Natural attrition among employees also affects the amount of savable wages; for, to the extent the crew of these trains or the employees they "bump" can be transferred to posi

tions left vacant by senior employees who retire, quit, et cetera, the carrier can avoid the full amount of the transferred employee's former wages. The carrier has not given us an analysis of its employment situation that would permit a precise determination of savable wages; but this is not a serious deficiency here, since there is such a wide disparity between the revenues and the costs. Even if all the wage expenses for train and engine crewmen, together with all of the health and welfare and payroll rates expenses were rejected as unsavable, the carrier would still show a net deficit from operating the trains for the first 6 months of 1968 and for the projected 1 year's operation previously referred to. Obviously there will be considerable savings in wages of traincrews and enginecrews as a result of the discontinuance, as well as in the health and welfare and payroll tax items. The latter apply also to station and custodial employees and are not confined solely to the traincrews and enginecrews. Compare Chesapeake & O. Ry. Co.-Discontinuance of Trains, 333 I.C.C. 95, 109.

Station force reduction expenses represent wages of clerks, mail sorters, and custodians which would be saved upon the discontinuance of the trains. Passenger car rentals are actual as are pullman car rentals. Dining car expenses are the proportion of actual expenses chargeable to the trains from the operation of special dining car service. Joint-facilities expenses are those paid on a user basis which would be saved upon the discontinuance. Pilot service-Sheridan is the savings based on the difference between the regular daily switchmans rate and the regular daily foremans rate which the switchman receives for piloting the passenger engine. Health and welfare expenses and payroll taxes represent applicable percentages of these items payable on employee wages chargeable to the trains. The remaining cost items are based on system averages per mile applied to the actual miles operated by the trains. No depreciation was taken on the zephyr coaches rented from the Fort Worth and Denver Railway Company. The locomotives and baggage cars assigned to the trains will be retired if the proposed discontinuance is accomplished.

In compliance with our order to do so, the carrier has presented evidence on the feasibility of continuation, in part, of the trains' service. This evidence was presented in the form of the financial results of operating the trains (1) between Omaha and Alliance; (2) between Alliance and Billings; (3) between Omaha and Alliance on a twice weekly (Fridays and Sundays) schedule; and (4) between Lincoln and Sheridan on a thrice weekly (Saturdays, Mondays, and Thursdays) schedule.