Louis: It did work, Conrail essentially used the PC's pre-merger plan, that PC never implemented, because Bevan (PRR / PC Treasurer), wouldn't release the Capital funds. Bevan, was on his own program, and diverted much capital to diversification and non rail assets.It's sad to think of what could have been, but Conrail and Amtrak managed to make it work.
(The creation fo Conrail, unintentionally also fulfilled Bevan's plan, as American Premier Underwriters, a Property & Casualty Insurer that is a Subsidy of APU Holdings).
Penn Central handicapped itself, because of Chairman Stewart Saunders desperation Political deals including offering Union Employees a lifetime guarantee, not only of a job, but of income. This resulted in massive recalls of long term furloughed employees who's jobs had been abolished years before. Saunders agreed to include the New Haven railroad, to gain support of New England politicians.
On the other hand, Penn Central had more freight business than their physical infrastructure could handle, and on top of that, to gain favor with politicians they agreed to restrict freight operations in commuter territory so as not to cause delay s during commuter peak hours. Pearlman, the NYC President, and PC Operating Czar, was stifled from making operating improvements by Bevan's tight fisted handling of Capital.
Essentially, even in the contemporary regulatory environment, where the Railroad was a "Common Carrier" and required regulatory authority to implement change, the company could have done better, if better people, focused on running the railroad, were in charge.