Union Pacific, Wabtec Strike Landmark $1.2B Locomotive Modernization Deal

Union Pacific Corporation (NYSE:UNP) is included among the 15 Best Wide Moat Dividend Stocks to Invest in.

On February 4, Union Pacific Corporation (NYSE:UNP) and Wabtec reached a $1.2 billion agreement to overhaul Union Pacific’s AC4400 locomotive fleet. The companies called it “the largest locomotive modernization investment in rail industry history,” with deliveries slated to begin in 2027.

The timing reflects a broader shift across US railroads. With infrastructure funding flowing in, operators are moving to refresh aging fleets, swapping older engines for more fuel-efficient, digitally enabled locomotives. It’s a practical upgrade cycle, driven as much by cost control as by performance.

Union Pacific expects tangible gains from the program. The modernized locomotives should cut fuel consumption by more than 5%, lift tractive effort by 14%, and improve reliability by about 80%. Once the work is complete, the railroad will have more than 1,700 upgraded units in service. This is its fourth modernization agreement with Wabtec, a sign that the partnership is well established.

From a market perspective, the news follows a more cautious note from JPMorgan. On January 28, the firm trimmed its price target on Union Pacific to $265 from $270 and kept a Neutral rating.

Union Pacific Corporation (NYSE:UNP) runs one of the largest rail networks in the country, spanning more than 23 states across the western two-thirds of the US. Its network plays a central role in moving goods through the domestic and global supply chain.

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Disclosure: None.