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Santa Fe-Southern Pacific (SPSF Railway)

Santa Fe-Southern Pacific Railroad: Merger, History, Paint Scheme

Last revised: November 10, 2026

The Santa Fe and the Southern Pacific tried to become one railroad and got as far as a holding company and a new locomotive paint scheme. Santa Fe Industries and the Southern Pacific Company joined on December 23, 1983, as Santa Fe Southern Pacific Corporation. The two railroads continued as separate carriers. On July 24, 1986, the Interstate Commerce Commission voted 4 to 1 to deny the merger. Chairman Heather Gradison cast the only vote in favor. On June 30, 1987, the Commission refused to reopen the case and started the clock on a sale.

Both roads had already painted locomotives red and yellow. Fans named the scheme Kodachrome. Engines that carried the full letters SPSF picked up a second name, “Shouldn’t Paint So Fast.” The reporting marks were ATSF and SP. On December 28, 1987, the holding company agreed to sell the Southern Pacific to Rio Grande Industries, parent of the Denver & Rio Grande Western. That sale still needed the Commission’s approval. The Santa Fe stayed in the holding company.

Santa Fe SD45u 5344 in Kodachrome paint in June 1986

Santa Fe SD45u #5344; June, 1986. Kodachrome for the intended merger denied by the ICC that year. American-Rails.com collection.

On this page: At a glance · The 1980 proposal · The holding company · Finance Docket 30400 · Kodachrome · The case stays closed · Rio Grande Industries · Where the railroads went

At a glance

Item	Detail
Proposal	Merger of the Atchison, Topeka and Santa Fe Railway and the Southern Pacific Transportation Company. The railroad merger was denied.
Parents	Santa Fe Industries, Chicago. Southern Pacific Company, San Francisco.
Holding company	Santa Fe Southern Pacific Corporation
1980	A $1.2 billion Santa Fe plan to take over the Southern Pacific. The talks fell through.
Announced	September 27, 1983, by John J. Schmidt and B. F. Biaggini
Share exchange	1.543 shares of the new company for each Southern Pacific share. 1.203 shares for each Santa Fe share. Initial dividend contemplated at $1.
Officers	Schmidt, chairman and chief executive. R. D. Krebs, president and chief operating officer. The board split evenly between the two parents.
Non-rail assets	Agreement dated October 4, 1983
Parents joined	December 23, 1983. Southern Pacific Transportation Company placed in a voting trust. The railroads continued as separate carriers.
Mainline miles	Approximately 25,000, in the companies’ joint announcement
Application	March 23, 1984. Finance Docket No. 30400. 24 volumes. Hearings from October 1, 1984, running 78 days.
Vote	July 24, 1986. 4 to 1. Chairman Heather Gradison in favor of the merger.
Written decision	October 10, 1986. Santa Fe Southern Pacific Corp.—Control—Southern Pacific Transportation Co., 2 I.C.C.2d 709.
Reopening refused	June 30, 1987. 4 to 1. Written decision August 4, 1987.
Southern Pacific sale	Agreement December 28, 1987, with Rio Grande Industries. $1.02 billion in cash plus $780 million of Southern Pacific debt.
Paint	Red and yellow Kodachrome. Fans’ line for the full SPSF letters: “Shouldn’t Paint So Fast.”
Marks	ATSF and SP. The letters SPSF were paint, in the reverse order of the holding company’s name.

The 1980 proposal

The 1983 announcement was the second try. In 1980 the Santa Fe proposed a $1.2 billion plan to take over the Southern Pacific. Graeme Browning of United Press International, writing on September 28, 1983, said those talks fell through because government approval would have taken too long. He credited the Staggers Rail Act of 1980 with changing the clock. The Act, he wrote, gave the Interstate Commerce Commission a 31-month deadline for approving a rail merger.

The holding company

On September 27, 1983, in San Francisco, Santa Fe Industries Inc. and Southern Pacific Co. announced an agreement in principle. John J. Schmidt, chairman and chief executive of Santa Fe Industries, and B. F. Biaggini, chairman and chief executive of Southern Pacific Co., described it as a business combination. The new holding company would be named Santa Fe Southern Pacific Corporation. The next day, at a news conference in his San Francisco headquarters, Biaggini called it a “merger of equals” that would produce “one of the world’s largest and strongest companies.” Browning wrote that the combination should be completed by the end of the year.

Each outstanding Southern Pacific share was to be exchanged for 1.543 shares of the new company, and each Santa Fe share for 1.203. The companies contemplated an initial dividend of $1 a share. Schmidt would be chairman and chief executive. R. D. Krebs, president of the Southern Pacific Transportation Company, would be president and chief operating officer. Each parent would nominate half the board. Santa Fe headquarters would remain in Chicago. Southern Pacific Company headquarters would remain in San Francisco.

The joint statement said the efficiencies inherent in the combination were “necessary to maintain our competitive position in an environment wherein major railroad combinations have taken place.” Combined rail operations of “approximately 25,000 mainline miles,” it said, would maintain “healthy and balanced competition in the transcontinental freight market and in regional areas.” Natural resources, real estate, and financial services were part of the same combination. On October 4, 1983, the two companies agreed to combine their non-rail assets. The railroad merger stayed in front of the Commission.

The parent-company merger was consummated on December 23, 1983, and Santa Fe Southern Pacific Corporation was the result. The Southern Pacific Transportation Company was placed in a voting trust to operate independently while the Commission considered merging the railroads.

Finance Docket 30400

On March 23, 1984, the holding company filed a 24-volume application to merge the Southern Pacific and the Santa Fe Railway. The case was Finance Docket No. 30400. Public hearings opened in Washington on October 1, 1984. Competing railroads protested the merger as anticompetitive. The hearings ran 78 days.

On July 24, 1986, after 28 months, the Commission voted 4 to 1 to reject the merger. Gradison dissented. Frank T. Csongos of United Press International reported the majority’s conclusion that the public benefits were “outweighed by adverse effects so great they cannot be remedied.” A written decision was expected that fall. The Southern Pacific remained in the voting trust. Schmidt, by then chairman of Santa Fe Southern Pacific, said the vote was unexpected. “The merger would have made a great, strong railroad.” Gradison called the result “an opportunity missed” and expressed “extreme” disappointment.

Csongos gave the Santa Fe 12,319 miles that day and the Southern Pacific 13,270. Both railroads, on his list, reached Los Angeles and Kansas City. The Santa Fe’s other principal terminals were Barstow and Stockton, Chicago and Streator, Pueblo, Dallas and Fort Worth, and Avard, Oklahoma. The Southern Pacific’s were Eugene and Roseville, West Colton, Houston, and Pine Bluff. The 1983 announcement had described approximately 25,000 mainline miles. Robert E. Dallos of the Los Angeles Times, recounting the proposal on July 1, 1987, called the merged railroad the nation’s second-largest in track mileage and gross revenue, with 24,797 miles, and wrote that 52,000 employees would have made it the largest railroad employer in the country. In his account the Burlington Northern was first in track mileage and CSX was first in revenue.

The written decision was served on October 10, 1986, and reported as Santa Fe Southern Pacific Corp.—Control—Southern Pacific Transportation Co., 2 I.C.C.2d 709. The Los Angeles Times later described it as a 200-page document reaffirming the July vote. The decision recognized substantial public benefits, through reduced transportation costs and improved service, and denied the merger. It ordered Santa Fe Southern Pacific to divest either the Southern Pacific Transportation Company or the Atchison, Topeka and Santa Fe, and to file a divestiture plan within 90 days. That deadline was stayed. Dallos wrote the next summer that the July vote had gone against the recommendation of the Commission’s own staff, and that the Justice Department had opposed the merger.

Kodachrome

Both railroads painted during the case. The Western Pacific Railroad Museum’s page for Southern Pacific GP9 2873, a unit that wore the scheme, says the locomotives were lettered SP or SF, with an empty space beside those initials for the other pair. Read across, the letters were SPSF, the reverse of Santa Fe Southern Pacific. The yellow was the Santa Fe’s secondary locomotive color. The red was the Southern Pacific’s. Enthusiasts named the combination Kodachrome. Some engines received the full SPSF lettering, and from that lettering came the line “Shouldn’t Paint So Fast.”

Santa Fe SD45u 5344, in the photograph above, was in the scheme in June 1986, the month before the vote. SD45u 5394 was near Venus, Texas, in August 1985.

Santa Fe SD45u 5394 in Kodachrome paint near Venus, Texas, in August 1985

Santa Fe SD45u #5394 in the Santa Fe-Southern Pacific’s railfan-coined “Kodachrome” livery near Venus, Texas; August, 1985. Mike Bledsoe photo. American-Rails.com collection.

The museum states the fleet in the scheme at the time of the denial as approximately 306 Santa Fe locomotives, 4 Santa Fe cabooses, 10 Santa Fe slugs, 96 Southern Pacific locomotives, and 1 Southern Pacific caboose. It says the Santa Fe had repainted the Kodachromes still on the roster by 1990, though some engines were sold still wearing the scheme, and that the Southern Pacific’s repaints came more slowly.

No. 2873 is an Electro-Motive GP9, built in December 1956 as Texas & New Orleans 443, builder number 22897, and rated at 1,750 horsepower. The museum dates its repaint to late 1985 or early 1986 and calls it one of the first four-axle locomotives in the scheme. In 1992 members of the Feather River Rail Society found the unit in a scrap yard in Richmond, California, and bought it for the Portola Railroad Museum, now the Western Pacific Railroad Museum. The museum lists it as out of service, awaiting paint.

The case stays closed

Santa Fe Southern Pacific asked the Commission to look again. Dallos’s chronology dates a request to reconsider to December 9, 1986. The Los Angeles Times chronology of August 10, 1988, says that after earlier filings the company asked on March 6, 1987, that the case be officially reopened. John J. Schmidt resigned on April 20, 1987. John S. Reed, who had preceded him at Santa Fe Industries, was chairman at the second vote.

On June 30, 1987, the Commission voted 4 to 1 against reopening. Gradison again voted for the merger. The vote lifted the stay on the divestiture order. Dallos, writing the next day, reported that the company had 90 days to submit a plan to sell one railroad or both within two years. Officers of Santa Fe Southern Pacific said they would let the ruling stand. “We had believed that the commission’s original objections had been satisfied,” Reed said. “While it is possible to appeal the decision in the court, we believe the employees of these two railroads have been held in suspense long enough, and I will not recommend that we pursue that possibility.”

Gradison said the rehearing was denied because her colleagues believed a better combination might still be coming, and that it was not up to the Commission to find the perfect merger. The company had hoped a trackage agreement with the Union Pacific would answer the competitive objection. Santa Fe Southern Pacific would grant the Union Pacific rights over some of the track of its two railroads, and the Union Pacific would support a rehearing. Commissioner Malcolm M. B. Sterrett said the anticompetitive concerns remained. The written decision of August 4, 1987, held that the company had failed to prove anything had changed since the merger was rejected. On September 4, 1987, Santa Fe Southern Pacific said it would divest the Southern Pacific.

Rio Grande Industries

By October 16, 1987, seven offers were in hand, from $750 million to more than $1 billion. On December 28 the holding company agreed to sell the Southern Pacific to Rio Grande Industries. Nancy Rivera Brooks of the Los Angeles Times valued the deal at $1.8 billion: $1.02 billion in cash and the assumption of $780 million in Southern Pacific debt. The sale needed the Commission’s approval. Brooks quoted Robert D. Krebs, chief executive of Santa Fe Southern Pacific: “After looking at all the alternatives, we believe this proposed sale is consistent with the public interest and is in the best interest of our shareholders.” Samuel R. Freeman, vice president of Rio Grande Industries, said the petition would preserve competition. “We want to underscore that this is a merger.”

Brooks described a 13,000-mile Southern Pacific, then ranked sixth, joined to a regional Rio Grande of about 2,500 miles in Colorado and Utah, plus trackage rights on the Union Pacific into Kansas City. She gave the Southern Pacific 25,390 employees and the Rio Grande about 2,200, and she called the combination the nation’s fifth-largest railroad. She named Kansas City Southern Industries and Guilford Transportation Industries among the other finalists, along with offers from the Southern Pacific’s own management and from the Railway Labor Executives Association.

Richard Hall, speaking for Santa Fe Southern Pacific, said, “We thought our case would take 15 months and was certain of approval—and it took 30 and was turned down.” Brooks also reported Schmidt’s earlier warning, as the former chairman, that the Southern Pacific faced bankruptcy if the Santa Fe merger were turned down. When Rio Grande Industries made its offer in September, Freeman suggested the Southern Pacific name would survive.

Where the railroads went

The Commission still had the Rio Grande purchase in front of it. The Southern Pacific’s history from that decision forward, including the years under Rio Grande Industries, is on the Southern Pacific page. The Denver & Rio Grande Western has its own page. The Santa Fe stayed with the holding company, and its later combination with the Burlington Northern is on the Santa Fe page.

Sources

United Press International, September 27, 1983, San Francisco. Joint announcement by John J. Schmidt and B. F. Biaggini. Holding company Santa Fe Southern Pacific Corporation. Share exchange of 1.543 and 1.203. Contemplated dividend of $1. R. D. Krebs as president and chief operating officer. An even split of the board. Headquarters remaining in Chicago and San Francisco. Approximately 25,000 mainline miles, and the joint statement on efficiencies and competition.
Graeme Browning, United Press International, September 28, 1983. The 1980 proposal as a $1.2 billion Santa Fe plan to take over the Southern Pacific, and his account that the talks fell through because government approval would have taken too long. The Staggers Rail Act of 1980 and a 31-month deadline. Biaggini’s “merger of equals.”
Frank T. Csongos, United Press International, July 24, 1986. The 4-to-1 vote, Chairman Heather Gradison dissenting. The conclusion that public benefits were outweighed by adverse effects so great they cannot be remedied. Schmidt’s “great, strong railroad.” Santa Fe mileage of 12,319 and Southern Pacific mileage of 13,270, with the terminal lists printed that day.
Los Angeles Times, August 10, 1988, “Tracking a Merger.” October 4, 1983, for the non-rail agreement. December 23, 1983, for the parent merger and the voting trust. The 24-volume application of March 23, 1984. Hearings from October 1, 1984. Seventy-eight days of hearings, and the July 24, 1986, vote after 28 months. The 200-page decision of October 10, 1986. The March 6, 1987, request to reopen. The June 30, 1987, vote. The written denial of August 4, 1987. The September 4, 1987, choice to divest the Southern Pacific. Seven offers by October 16, 1987. The December 28, 1987, sale agreement.
Interstate Commerce Commission, Santa Fe Southern Pacific Corp.—Control—Southern Pacific Transportation Co., 2 I.C.C.2d 709 (1986), Finance Docket No. 30400. Written decision served October 10, 1986. Substantial public benefits recognized, and the merger denied. Divestiture of either railroad, and a plan within 90 days. That plan order was stayed. The June 30, 1987, vote lifted the stay.
Robert E. Dallos, Los Angeles Times, July 1, 1987. The June 30 vote. Ninety days to submit a plan to sell one railroad or both within two years. John S. Reed’s statement that he would not recommend an appeal. Schmidt’s resignation on April 20, 1987, and a request to reconsider dated December 9, 1986. The proposed system as the second-largest in track mileage and gross revenue, 24,797 miles, and 52,000 employees. The Justice Department’s opposition, and a staff recommendation the July 1986 vote went against. The Union Pacific trackage agreement.
Nancy Rivera Brooks, Los Angeles Times, December 29, 1987. The December 28 agreement at $1.8 billion, $1.02 billion in cash plus $780 million of Southern Pacific debt, still subject to Commission approval. Krebs and Samuel R. Freeman. Richard Hall on 15 months and 30. A 13,000-mile Southern Pacific and a Rio Grande of about 2,500 miles. Employees 25,390 and about 2,200. The other bidders. Freeman’s September suggestion that the Southern Pacific name would survive.
Western Pacific Railroad Museum, page for Southern Pacific GP9 2873, updated October 5, 2026. The SP-or-SF lettering with a blank for the other pair. Kodachrome, from the two secondary colors, and “Shouldn’t Paint So Fast.” The museum’s count at the denial. Repaints. No. 2873 built in December 1956 as Texas & New Orleans 443, builder number 22897, and its move in 1992 from a Richmond scrap yard to the Portola museum.

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