<PAGE> PAGE 1




             UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C.  20549
                          -----------------------


                                 FORM 10-Q


(X)  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934
     For the quarterly period ended MARCH 31, 1999

( )  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934
     For the transition period from            to
                                    ----------    ----------
          Commission file numbers 1-743; 1-3744; 1-4793; 1-546-2


                     NORFOLK SOUTHERN RAILWAY COMPANY
--------------------------------------------------------------------------
          (Exact name of registrant as specified in its charter)

            Virginia                               53-6002016
-----------------------------------     ---------------------------------
(State or other jurisdiction of         (IRS Employer Identification No.)
 incorporation or organization)

     Three Commercial Place
       Norfolk, Virginia                           23510-2191
-----------------------------------     ---------------------------------
(Address of principal executive offices)            Zip Code


Registrant's telephone number, including area code   (757) 629-2682
                                                  ----------------------


                                 No Change
--------------------------------------------------------------------------
           (Former name, former address and former fiscal year,
                      if changed since last report.)


Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. (X) Yes ( ) No

The number of shares outstanding of each of the registrant's classes
of Common Stock, as of the last practicable date:

                Class                Outstanding as of April 30, 1999
                -----                --------------------------------
     Common Stock (par value $1.00)             16,668,997


<PAGE> PAGE 2


        NORFOLK SOUTHERN RAILWAY COMPANY AND SUBSIDIARIES (NS RAIL)

                                   INDEX
                                   -----

                                                                  Page
                                                                  ----
Part  I.    Financial Information:

            Item 1. Financial Statements:

                    Consolidated Statements of Income
                    Three Months Ended March 31, 1999 and 1998       3

                    Consolidated Balance Sheets as of
                    March 31, 1999, and December 31, 1998            4

                    Consolidated Statements of Cash Flows
                    Three Months Ended March 31, 1999 and 1998     5-6

                    Notes to Consolidated Financial Statements    7-10

            Item 2. Management's Discussion and Analysis of
                    Financial Condition and Results of 
                    Operations                                   11-18


Part II.    Other Information:

            Item 6. Exhibits and Reports on Form 8-K                19


Signatures                                                          20


Index to Exhibits                                                   21


<PAGE> PAGE 3


                      PART I.  FINANCIAL INFORMATION
                      ------------------------------

Item 1.   Financial Statements.
------    --------------------

<TABLE>
             NORFOLK SOUTHERN RAILWAY COMPANY AND SUBSIDIARIES
       (A Majority-Owned Subsidiary of Norfolk Southern Corporation)
                     Consolidated Statements of Income
                              ($ in millions)
                                (Unaudited)

<CAPTION>
                                                       Three Months Ended
                                                            March 31,
                                                       ------------------
                                                        1999       1998
                                                        ----       ----

<S>                                                  <C>        <C>
Railway operating revenues:
 Coal                                                $   282    $   323
 General merchandise                                     623        605
 Intermodal                                              125        138
                                                     -------    -------
     RAILWAY OPERATING REVENUES                        1,030      1,066

Railway operating expenses:
 Compensation and benefits                               368        396
 Materials, services, and rents                          197        191
 Depreciation                                            113        106
 Diesel fuel                                              37         48
 Casualties and other claims                              35         30
 Other                                                    58         44
                                                     -------    -------
     RAILWAY OPERATING EXPENSES                          808        815
                                                     -------    -------
     Income from railway operations                      222        251

Other income - net                                        15         20
Interest expense on debt                                  (7)        (5)
                                                     -------    -------
     Income before income taxes                          230        266

Provision for income taxes                                84         98
                                                     -------    -------

     NET INCOME                                      $   146    $   168
                                                     =======    =======
</TABLE>

See accompanying notes to consolidated financial statements.


<PAGE> PAGE 4


Item 1.   Financial Statements. (continued)
------    --------------------

<TABLE>
             NORFOLK SOUTHERN RAILWAY COMPANY AND SUBSIDIARIES
       (A Majority-Owned Subsidiary of Norfolk Southern Corporation)
                        Consolidated Balance Sheets
                              ($ in millions)
                                (Unaudited)

<CAPTION>
                                                March 31,     December 31,
                                                  1999           1998
                                                --------      -----------

<S>                                           <C>            <C>
ASSETS
Current assets:
 Cash and cash equivalents                    $      80      $      --
 Short-term investments                              14             44
 Accounts receivable, net of allowance for
  doubtful accounts of $5 million and
  $4 million, respectively                          556            508
 Materials and supplies                              55             59
 Deferred income taxes                              110            110
 Other current assets                               132            130
                                              ---------      ---------
     Total current assets                           947            851

Due from NS - net (Note 3)                           --             43
Investments                                         891            990
Properties less accumulated depreciation         10,131          9,985
Other assets                                        180            148
                                              ---------      ---------
     TOTAL ASSETS                             $  12,149      $  12,017
                                              =========      =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Accounts payable                             $     550      $     577
 Income and other taxes                             175            139
 Due to NS - net (Note 3)                           161             --
 Other current liabilities                           77             73
 Current maturities of long-term debt               148            141
                                              ---------      ---------
     Total current liabilities                    1,111            930

Long-term debt (Note 4)                             692            619
Other liabilities                                   907            909
Minority interests                                    3              2
Deferred income taxes                             3,430          3,420
                                              ---------      ---------
     TOTAL LIABILITIES                            6,143          5,880
                                              ---------      ---------

Stockholders' equity:
 Serial preferred stock                              55             55
 Common stock                                       167            167
 Additional paid-in capital                         548            548
 Accumulated other comprehensive income
  (Note 5)                                          338            414
 Retained income                                  4,898          4,953
                                              ---------      ---------
     TOTAL STOCKHOLDERS' EQUITY                   6,006          6,137
                                              ---------      ---------
     TOTAL LIABILITIES AND STOCKHOLDERS'
      EQUITY                                  $  12,149      $  12,017
                                              =========      =========
</TABLE>

See accompanying notes to consolidated financial statements.


<PAGE> PAGE 5


Item 1.   Financial Statements. (continued)
------    --------------------

<TABLE>
             NORFOLK SOUTHERN RAILWAY COMPANY AND SUBSIDIARIES
       (A Majority-Owned Subsidiary of Norfolk Southern Corporation)
                   Consolidated Statements of Cash Flows
                              ($ in millions)
                                (Unaudited)

<CAPTION>
                                                     Three Months Ended
                                                          March 31,
                                                     ------------------
                                                       1999       1998
                                                       ----       ----

<S>                                                 <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income                                         $  146      $  168
 Reconciliation of net income to net cash
   provided by operating activities:
     Depreciation                                      114         106
     Deferred income taxes                              19          14
     Nonoperating gains on property sales               (5)        (13)
     Changes in assets and liabilities affecting
      operations:
       Accounts receivable                             (48)        (15)
       Materials and supplies                            4          (6)
       Other current assets                             (2)          9
       Income tax liabilities                           69         105
       Other short-term liabilities                    (39)        (44)
       Other - net                                       6           9
                                                    ------      ------
            Net cash provided by operating
             activities                                264         333

CASH FLOWS FROM INVESTING ACTIVITIES:
 Property additions (Note 4)                          (263)       (223)
 Property sales and other transactions                   9          10
 Investments, including short-term                     (44)        (33)
 Investment sales and other transactions                31          26
                                                    ------      ------
            Net cash used for investing activities    (267)       (220)

CASH FLOWS FROM FINANCING ACTIVITIES:
 Dividends (Note 3)                                     (1)         (1)
 Advances and repayments to NS                         (17)         (8)
 Advances and repayments from NS                        22          46
 Proceeds from long-term borrowings (Note 4)            94           2
 Long-term debt repayments                             (15)        (13)
                                                    ------      ------
            Net cash provided by financing
             activities                                 83          26
                                                    ------      ------
            Net increase in cash and cash
             equivalents                                80         139

CASH AND CASH EQUIVALENTS:*
 At beginning of year                                   --           7
                                                    ------      ------
 At end of period                                   $   80      $  146
                                                    ======      ======


<PAGE> PAGE 6


Item 1.   Financial Statements. (continued)
------    --------------------

             NORFOLK SOUTHERN RAILWAY COMPANY AND SUBSIDIARIES
       (A Majority-Owned Subsidiary of Norfolk Southern Corporation)
             Consolidated Statements of Cash Flows (continued)
                              ($ in millions)
                                (Unaudited)

                                                     Three Months Ended
                                                          March 31,
                                                     ------------------
                                                       1999       1998
                                                       ----       ----

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
 Cash paid during the period for:
   Interest (net of amounts capitalized)              $  16      $  13
   Income taxes                                       $  (4)     $  --


*  Cash equivalents represent all highly liquid 
   investments purchased three months or less from 
   maturity.
</TABLE>


See accompanying notes to consolidated financial statements.


<PAGE> PAGE 7


Item 1.   Financial Statements. (continued)
------    --------------------

             NORFOLK SOUTHERN RAILWAY COMPANY AND SUBSIDIARIES
       (A Majority-Owned Subsidiary of Norfolk Southern Corporation)
                Notes to Consolidated Financial Statements

1.   In the opinion of Management, the accompanying unaudited interim
     financial statements contain all adjustments (consisting of
     normal recurring accruals) necessary to present fairly the
     financial position as of March 31, 1999, and results of
     operations and cash flows for the three months ended March 31,
     1999 and 1998.

     Although Management believes that the disclosures presented are
     adequate to make the information not misleading, these
     consolidated financial statements should be read in conjunction
     with the financial statements and notes included in the Company's
     latest Annual Report on Form 10-K.

2.   Commitments and Contingencies

     There have been no significant changes since year-end 1998 in the
     matters as discussed in NOTE 16, COMMITMENTS AND CONTINGENCIES,
     appearing in the NS Rail Annual Report on Form 10-K for 1998,
     Notes to Consolidated Financial Statements, beginning on page 66.

3.   Related Parties

     General
     -------
     NS is the parent holding company of NS Rail.  The costs of
     functions performed by NS are charged to NS Rail, and NS charges
     NS Rail a revenue-based licensing fee for use of certain
     intangible assets owned by NS.  Rail operations are coordinated
     at the holding company level by the NS Vice Chairman and Chief
     Operating Officer.

     Joint Acquisition of Conrail by NS
     ----------------------------------
     NS and CSX Corporation (CSX) jointly own Conrail Inc. (Conrail),
     whose primary subsidiary is Consolidated Rail Corporation, the
     major freight railroad in the Northeast.

     It is expected that Conrail's operations will continue
     substantially unchanged until NS Rail and CSX Transportation
     (CSXT) commence operating the respective Conrail properties that
     will be leased to them pursuant to operating and lease
     agreements, an event that NS and CSX have agreed will occur on
     June 1, 1999 (the "Closing Date").  A failure by NS Rail or CSXT
     to integrate successfully the respective portion of Conrail that
     each will lease, including information technology systems, could
     have a substantial adverse impact on NS Rail's financial
     position, results of operations, and liquidity.


<PAGE> PAGE 8


Item 1.   Financial Statements. (continued)
------    --------------------

3.   Related Parties (continued)

     After the Closing Date, NS Rail and CSXT will provide
     substantially all rail freight services on Conrail's former route
     system, perform or be responsible for performance of most
     services incident to customer freight contracts, and employ the
     majority of Conrail's work force.

     Until the Closing Date, NS Rail will continue to have
     transactions in the normal course of business with Conrail's
     railroad subsidiary.

     NS' $6.2 billion investment in Conrail includes $165 million
     ($101 million after taxes) of costs that are expected to be borne
     by NS Rail.  These costs consist principally of:  (1) contractual
     obligations to Conrail employees imposed by the STB when it
     approved the transaction, and (2) costs to relocate Conrail
     employees.  Most of these costs are expected to be paid in the
     two years following the Closing Date; however, certain
     contractual obligations by their terms will be paid out over a
     longer period.  These costs are based on preliminary estimates of
     separation, relocation, and other labor-related contractual
     obligations to Conrail employees.  These estimates may be
     modified as more information becomes available.  Severance and
     relocation plans are expected to be finalized shortly after the
     Closing Date.  As a consequence, amounts ultimately included in
     the allocation could differ from the original estimates; however,
     any such differences are not now expected to be material.  As
     definitive plans are determined and communicated, costs, if any,
     for severing or relocating NS Rail employees and for disposing of
     NS Rail facilities will be charged to operating expense.

     Railway operating expenses in the first quarter of 1999 and 1998
     included Conrail-related integration costs.


<PAGE> PAGE 9


Item 1.   Financial Statements. (continued)
------    --------------------

3.   Related Parties (continued)

<TABLE>
     Intercompany Accounts
     ---------------------

<CAPTION>
                                 March 31, 1999      December 31, 1998
                               ------------------    ------------------
                                          Average               Average
                                         Interest              Interest
                               Balance     Rate      Balance     Rate
                               -------   --------    -------   --------
                                           ($ in millions)

     <S>                       <C>        <C>        <C>        <C>
     Due from NS:
      Advances                 $ 168      5%         $ 354      5%

     Due to NS:
      Notes and advances         329      6%           311      7%
                               -----                 -----
        Due (to) from NS
         - net                 $(161)                $  43
                               =====                 =====
</TABLE>

     Interest is applied to certain advances at the average NS yield
     on short-term investments and to the notes at specified rates.

     Noncash Dividend
     -----------------
     In March 1999, NS Rail declared and issued to NS a noncash
     dividend of $200 million, which was settled by reduction of
     NS Rail's interest-bearing advances due from NS.  Noncash
     dividends are excluded from the Consolidated Statements of Cash
     Flows.

     Intercompany Federal Income Tax Accounts
     ----------------------------------------
     In accordance with the NS Tax Allocation Agreement, intercompany
     federal income tax accounts are recorded between companies in the
     NS consolidated group.  At March 31, 1999, and Dec. 31, 1998,
     NS Rail had long-term intercompany federal income tax payables
     (which are included in "Deferred income taxes" in the
     Consolidated Balance Sheets) of $663 million and $633 million,
     respectively.

     Cash Required for NS Debt
     -------------------------
     During 1997, NS borrowed $5.8 billion to finance the joint
     acquisition, with CSX, of Conrail.  A significant portion of the
     funding for the interest and repayments on this debt is expected
     to be provided by NS Rail.


<PAGE> PAGE 10


Item 1.   Financial Statements. (continued)
------    --------------------

4.   Long-Term Debt

     Equipment Trust Certificates
     ----------------------------
     NS Rail issued equipment trust certificates in the first quarter
     of 1999 and received $94 million of net proceeds.  The
     certificates mature serially April 1, 2000 through 2014,
     inclusive, and carry a weighted-average interest rate of
     6.0 percent.  Proceeds were used to acquire locomotives and
     freight cars, and at March 31, 1999, $27 million of the proceeds
     had not been spent and were included in "Other assets."

     Capital Lease Obligations
     -------------------------
     During the first quarter of 1998, NS Rail entered into capital
     leases covering new locomotives.  The related capital lease
     obligations, totaling $73 million, were reflected in the
     Consolidated Balance Sheet as debt and, because they were noncash
     transactions, were excluded from the Consolidated Statement of
     Cash Flows.

5.   Comprehensive Income

<TABLE>
     NS Rail's total comprehensive income was as follows:

<CAPTION>
                                                 Three Months Ended
                                                      March 31,
                                                 ------------------
                                                  1999         1998
                                                  ----         ----
                                                  ($ in millions)

     <S>                                          <C>          <C>
     Net income                                   $ 146        $ 168
     Other comprehensive income (loss)              (76)          96
                                                  -----        -----
          Total comprehensive income              $  70        $ 264
                                                  =====        =====
</TABLE>

     For NS Rail, "Other comprehensive income" is the unrealized gains
     and losses on certain investments in debt and equity securities,
     principally NS common stock.


<PAGE> PAGE 11


Item 2.   Management's Discussion and Analysis of Financial Condition
------    -----------------------------------------------------------
          and Results of Operations.
          -------------------------

             NORFOLK SOUTHERN RAILWAY COMPANY AND SUBSIDIARIES
       (A Majority-Owned Subsidiary of Norfolk Southern Corporation)
        Management's Discussion and Analysis of Financial Condition
                         and Results of Operations

RESULTS OF OPERATIONS

Net Income
----------
Net income for the first quarter of 1999 was $146 million, down
$22 million, or 13 percent, compared with first-quarter 1998,
principally due to a $29 million, or 12 percent, decrease in income
from railway operations.


Railway Operating Revenues
--------------------------
<TABLE>
First-quarter railway operating revenues were $1,030 million, down
$36 million, or 3 percent, compared with last year.  As shown in the
table below, the decrease was due to lower traffic volume.

<CAPTION>
                                               First Quarter
                                               1999 vs. 1998
                                             Increase (Decrease)
                                             ------------------
                                              ($ in millions)

     <S>                                          <C>
     Traffic volume (carloads)                    $ (37)
     Revenue per unit                                 1
                                                  -----
                                                  $ (36)
                                                  =====
</TABLE>

<TABLE>
Revenues and carloads for the commodity groups were as follows:

<CAPTION>
                                 Revenues                Carloads
                             1999       1998          1999      1998
                             ----       ----          ----      ----
                              ($ in millions)         (in thousands)

<S>                        <C>        <C>            <C>       <C>
Coal                       $  282     $   323          301       331
General merchandise:
  Automotive                  160         138          136       116
  Chemicals                   148         146           99       102
  Paper/clay/forest           128         137          103       116
  Metals/construction          94          91           90        88
  Agri./consumer prod./govt.   93          93           84        89
                           ------      ------        -----     -----
General merchandise           623         605          512       511
Intermodal                    125         138          346       367
                           ------      ------        -----     -----
      Total                $1,030      $1,066        1,159     1,209
                           ======      ======        =====     =====
</TABLE>


<PAGE> PAGE 12


Item 2.   Management's Discussion and Analysis of Financial Condition
------    -----------------------------------------------------------
          and Results of Operations. (continued)
          -------------------------

Coal
----
Coal revenues decreased $41 million, or 13 percent.  Total tonnage
handled decreased 8 percent, reflecting declines of 34 percent in
export coal and 18 percent in domestic steel coal that were partially
offset by a 3 percent increase in utility tonnage.  Export coal
traffic volume continues to be adversely affected by world economic
conditions and the strength of the U.S. dollar compared with the
currencies of countries that provide the primary competition for U.S.
export coal.  Domestic steel coal traffic volume reflected the effects
of increased imports of lower-priced steel and plant closures in the
second quarter of 1998.

Coal revenues for the remainder of the year are expected to continue
to be adversely affected by weak demand for export coal.  In the first
full month of operations after the Closing Date of the Conrail
transaction (see "Joint Acquisition of Conrail by NS," below), coal
revenues are expected to increase by about one-third.  As a result of
these two factors, total coal revenues, compared with last year, are
expected to be comparable in the second quarter and up about 
one-fourth in the last half of 1999.

General Merchandise
-------------------
General merchandise revenues increased $18 million, or 3 percent,
driven by a $22 million, or 16 percent, increase in automotive
revenues, reflecting continued growth in traffic handled through the
mixing center network.  Metals/construction revenues increased
$3 million, or 3 percent, due to increased shipments of iron, steel,
and aggregates.  Metals traffic increased despite a soft market
resulting from the availability of lower-priced, imported steel,
reflecting new business obtained from industrial development along
NS Rail's lines.  Paper/clay/forest revenues declined $9 million, or
7 percent, due to continued weakness in export markets and plant
closures.

General merchandise revenues are expected to continue to benefit
from new and increased business resulting from industrial
development along NS Rail's lines, which should offset the adverse
effects of weaknesses in other traffic segments.  Immediately
following the Closing Date of the Conrail transaction, general
merchandise revenues are expected to increase by almost one-half,
and, as a result, to increase by about one-fifth in the second
quarter, compared with 1998.

Intermodal
----------
Intermodal revenues decreased $13 million, or 9 percent, compared with
a strong first quarter last year.  Trailer and container traffic
volume decreased, reflecting the effects of the service network
redesign that was implemented in August 1998 and extreme winter
weather conditions early in the quarter.  Lower average revenues also
contributed to the decline.


<PAGE> PAGE 13


Item 2.   Management's Discussion and Analysis of Financial Condition
------    -----------------------------------------------------------
          and Results of Operations. (continued)
          -------------------------

Immediately following the Closing Date of the Conrail transaction,
intermodal revenues are expected to increase by about two-thirds and,
as a result, to increase by about one-fifth in the second quarter,
compared with last year.

Railway Operating Expenses
--------------------------
Railway operating expenses were $808 million in the first quarter,
down $7 million, or 1 percent, compared with last year.  The decline
was due to lower "Compensation and benefits" and "Diesel fuel"
expenses, somewhat offset by higher "Other," "Materials, services, and
rents," and "Casualties and other claims" expenses.

"Compensation and benefits" expense decreased $28 million, or
7 percent.  The decline was the result of:  (1) lower stock-based
compensation expense that resulted from a decrease in the price of NS
stock, compared with an increase last year, and (2) premium refunds
attributable to a surplus in the national union welfare benefit plan.

"Diesel fuel" expense declined $11 million, or 23 percent, due to a
lower average price per gallon.

"Materials, services, and rents" increased $6 million, or 3 percent,
due to costs associated with the increase in automotive traffic and
Conrail integration expenses, mitigated by reduced repair and
maintenance costs.

"Casualties and other claims" increased $5 million, or 17 percent, due
to the settlement of contested liability associated with the Bayou
Bonfouca NPL Superfund site located in Slidell, La., and increased
loss and damage expense, principally resulting from a derailment in
Holliday, Mo., involving automobiles.  Lower environmental expense
(excluding the effect of the settlement) and reduced personal injury
costs resulting from favorable claims experience somewhat offset these
increases.

"Other" expenses increased $14 million, or 32 percent, reflecting a
licensing fee for use of certain intangible assets owned by NS that
became effective Nov. 1, 1998.

The railway operating ratio was 78.4 percent, compared with
76.5 percent in the first quarter of 1998.  Excluding the effects of
the higher stock-based compensation last year and the union welfare
benefit plan premium refund, the difference in railway operating
ratios would have been about five percentage points, reflecting the
change in traffic mix related to the increase in automotive traffic
and the decrease in coal traffic, and the licensing fee included in
"Other" expenses.

Immediately following the Closing Date of the Conrail transaction,
NS Rail's railway operating expenses will increase, reflecting
expenses incurred to lease and operate its portion of Conrail's routes
and assets (see "Joint Acquisition of Conrail by NS," below).


<PAGE> PAGE 14


Item 2.   Management's Discussion and Analysis of Financial Condition
------    -----------------------------------------------------------
          and Results of Operations. (continued)
          -------------------------

Other Income - Net
------------------
"Other income - net" was $5 million lower in the first quarter,
principally due to lower gains from property sales.

<TABLE>
FINANCIAL CONDITION AND LIQUIDITY

<CAPTION>
                                     March 31,       December 31,
                                       1999              1998
                                     --------        -----------
                                            ($ in millions)

     <S>                               <C>               <C>
     Cash and short-term investments   $   94            $  44
     Debt-to-total capitalization        12.3%            11.0%
</TABLE>

CASH PROVIDED BY OPERATING ACTIVITIES is NS Rail's principal source of
liquidity (see Consolidated Statements of Cash Flows on page 5).  The
decline in "Net cash provided by operating activities" in the first
quarter of 1999, compared with first-quarter 1998, was principally due
to a larger increase in outstanding accounts receivable and a decrease
in operating income.

CASH USED FOR INVESTING ACTIVITIES increased in the first quarter of
1999, compared with the first quarter of 1998, as higher property
additions in 1999 reflected a change in financing methods:  in 1998,
locomotives were acquired under capital leases, which were excluded
from the Consolidated Statements of Cash Flows because they were
noncash transactions (see Note 4); in 1999, locomotives and freight
cars were financed through the sale of equipment trust certificates.

CASH PROVIDED BY FINANCING ACTIVITIES in the first quarter of 1999
included proceeds from the sale of equipment trust certificates (see
Note 4).

NS has issued a significant amount of debt related to its joint
acquisition of Conrail.  A significant portion of the funds to service
this debt is expected to come from NS Rail, NS' principal subsidiary.

JOINT ACQUISITION OF CONRAIL BY NS

NS and CSX Corporation (CSX), through a jointly owned entity, control
Conrail Inc. (Conrail), the owner of Consolidated Rail Corporation,
the major freight railroad in the Northeast (see Note 3).

Norfolk Southern Railway Company (NSR) will begin providing rail
freight services on portions of Conrail's route system after the
Closing Date, which NS and CSX have agreed will be June 1, 1999.  As a
result, beginning in June, NS Rail's railway operating revenues will
include revenues earned through operation of its portion of Conrail's
routes and assets and its access to the Shared Assets Areas, which
will be operated on behalf of NS and CSX.  NS Rail's railway operating



<PAGE> PAGE 15


Item 2.   Management's Discussion and Analysis of Financial Condition
------    -----------------------------------------------------------
          and Results of Operations. (continued)
          -------------------------

expenses will include the costs of such operation and access, including 
compensation and benefits for the approximately 11,500 Conrail employees 
who will become NSR employees on the Closing Date.  Furthermore, NS Rail 
will begin recording expenses related to amounts paid to Pennsylvania
Lines LLC, a Conrail subsidiary, pursuant to the operating and lease
agreements.  Such amounts include the fair value rental payments,
which are expected to be between $325 million and $350 million
annually, for the portion of Conrail's routes and assets that NSR
will lease.  In addition, NS Rail will begin recording expenses for
amounts paid to Conrail related to NS Rail's access to the Shared
Assets Areas, which will be based on fair value and percentage usage.

NSR has obtained, through negotiation or arbitration, all labor
implementing agreements necessary for closing.

NS Rail plans to implement its own information technology systems on
the portion of Conrail's routes NSR will operate.  While some systems
will be operational on the Closing Date, others -- particularly the
transportation systems -- will be integrated geographically over a
period of several months after the Closing Date.  Accordingly, some of
Conrail's systems are being modified to be compatible with NS Rail's
systems during the interim period.  Moreover, in the Shared Assets
Areas, some of Conrail's existing systems will continue to be used
and, therefore, must be able to work with both NS Rail's and CSXT's
systems.  Programming identified as being necessary for closing has
been substantially completed, and testing and refining of detailed
implementation plans will continue through the Closing Date.
Contingency plans involving labor-intensive, manual processes are
being developed where warranted to ensure continued operations in the
event of isolated or systemwide information technology systems
problems.

In anticipation of the Closing Date, NS Rail has accumulated resources
to enable it to operate the portion of Conrail's routes and assets
that NSR will lease.  This has included maintaining or increasing its
work force (particularly hiring and training additional train crews
and management employees), acquiring or leasing equipment based on
projected requirements, and beginning expansions to facilities on its
lines and on the portion of Conrail's property that it will operate.
These actions have resulted in increased operating expenses, and
expenses of this type are anticipated to continue after the Closing
Date.

The Closing Date marks the point at which NSR actually can begin to
operate certain of the assets and routes of Conrail, thereby
permitting NS Rail to begin to realize many of the anticipated
transaction benefits.  Realization of these benefits is dependent
upon, among other things:  (1) successful integration of NS Rail's
portion of Conrail's system into its railroad system; (2) successful
operations within the Shared Assets Areas; and (3) successful
coordination of NS Rail's (and CSXT's) operations with the Shared
Assets Areas' operations.  In addition, increased rail competition in



<PAGE> PAGE 16


Item 2.   Management's Discussion and Analysis of Financial Condition
------    -----------------------------------------------------------
          and Results of Operations. (continued)
          -------------------------

the Northeast could affect the extent of benefits realized.  A failure 
by NS Rail or CSXT to integrate successfully their respective portions of 
Conrail, including information technology systems, could have a 
substantial impact on NS Rail's financial position, results of operations, 
or liquidity.

YEAR-2000 COMPLIANCE

General
-------
In October 1995, NS Rail initiated a project to review and modify, as
necessary, its computer applications, hardware, and other equipment to
make them Year-2000 compliant.  NS Rail has engaged outside
consultants and independent contractors to assist with its Year-2000
project.  The progress of the project is reviewed regularly by
NS Rail's senior management and by the Audit Committee of NS' Board of
Directors.  The project is organized into three principal areas:
mainframe systems, nonmainframe systems, and enterprise systems
(operations and embedded processors), and for each such system
involves:  inventory, assessment, remediation, testing, and
implementation.  NS Rail expects to have all business-critical systems
remediated, tested, and implemented in the third quarter of 1999.

State of Readiness
------------------
For mainframe systems (data center infrastructure, purchased or leased
software, and mainframe applications), remediation and unit testing
for business-critical systems are in the final stages.  Systems
testing and implementation began in February 1999, and both are
expected to be completed in the third quarter of 1999 but require use
of the same resources needed for testing related to the Conrail
transaction (see "Joint Acquisition of Conrail by NS," above).

For most business-critical nonmainframe and enterprise systems,
remediation has been completed.  Testing and implementation is
expected to be completed by the third quarter of 1999.

NS Rail also has initiated formal communications with third parties
having a substantial relationship to its business (including other
railroads, significant suppliers, larger customers, and financial
institutions) to determine the extent to which NS Rail may be
vulnerable to any such third party's failure to achieve Year-2000
compliance.  Thus far, NS Rail has no information that indicates that
a significant third party may be unable to provide goods or services
or to request NS Rail's services because of Year-2000 issues.

Cost
----
NS Rail has allocated existing information technology resources and
has incurred incremental costs, mostly for contract programmers and
consultants, in connection with its Year-2000 compliance project.
Since the project began, Management estimates that up to 10 percent of


<PAGE> PAGE 17


Item 2.   Management's Discussion and Analysis of Financial Condition
------    -----------------------------------------------------------
          and Results of Operations. (continued)
          -------------------------

NS Rail's in-house programming resources have been used for Year-2000
compliance efforts.  The effects of deferring other information
technology projects to accommodate the Year-2000 effort have been
minor.  Incremental costs incurred through March 31, 1999, which were
expensed, are immaterial to NS Rail's results of operations.  Total
incremental costs are expected to be approximately $25 million.

Contingency Plans
-----------------
In all areas, the project includes extensive testing to ensure that
remediation successfully addresses Year-2000 compliance.  NS Rail has
established a series of initiatives to focus on business-critical
systems to ensure continued operations in the event of a Year-2000
problem.  In addition, contingency plans are being developed where
warranted.

Conrail
-------
As a part of its preparations to integrate its railroad system with a
portion of Conrail's system, NS Rail is working with Conrail and CSXT
to ensure that certain Conrail computer applications, hardware, and
other equipment are Year-2000 compliant.  Conrail's core
transportation system is being made Year-2000 compliant, with a
projected completion date for all programming and testing of September
1999.  Conrail's other information technology systems are expected to
be replaced by NS Rail and CSXT systems within six months after the
Closing Date, or by Dec. 1, 1999.  A delay in replacing these systems,
which are not Year-2000 compliant, could result in their failure.
Conrail also has under way a project to inventory, assess, and
remediate all of its business-critical enterprise systems that will
continue to operate after the Closing Date.  This Conrail project is
scheduled for completion in the third quarter of 1999.

Risks
-----
Failure to achieve Year-2000 compliance -- by NS Rail, other
railroads, its principal suppliers and customers, and certain
financial institutions with which it has relationships -- could
negatively affect NS Rail's ability to conduct business for an
extended period.  Unanticipated delays in either the Conrail systems
integration effort or the Year-2000 project could adversely affect
NS Rail's ability to complete the other.  Management believes that
NS Rail will be successful in its Year-2000 compliance effort;
however, there can be no assurance that all NS Rail information
technology systems and components will be fully Year-2000 compliant.
In addition, other companies on which NS Rail systems and operations
rely may or may not be fully compliant on a timely basis, and any such
failure could have a material adverse effect on NS Rail's financial
position, results of operations, or liquidity.


<PAGE> PAGE 18


Item 2.   Management's Discussion and Analysis of Financial Condition
------    -----------------------------------------------------------
          and Results of Operations. (continued)
          -------------------------

NEW ACCOUNTING PRONOUNCEMENT

Effective Jan. 1, 1999, NS Rail adopted AICPA Statement of Position
98-1, "Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use."  Adoption of this pronouncement had no
material effect of NS Rail's consolidated financial statements.

FORWARD-LOOKING STATEMENTS

This Management's Discussion and Analysis of Financial Condition and
Results of Operations contains forward-looking statements that are
based on current expectations, estimates, and projections.  Such
forward-looking statements reflect Management's good-faith
evaluation of information currently available.  However, because
such statements are based upon, and therefore can be influenced by,
a number of external variables over which Management has no, or
incomplete, control, they are not, and should not be read as being,
guarantees of future performance or of actual future results; nor
will they necessarily prove to be accurate indications of the times
at or by which any such performance or result will be achieved.
Accordingly, actual outcomes and results may differ materially from
those expressed in such forward-looking statements.  This caveat has
particular importance in the context of all such statements that
relate to Year-2000 compliance and to the Conrail transaction,
including the realization and the timing of benefits expected to
result from its consummation.


<PAGE> PAGE 19


                        PART II.  OTHER INFORMATION
                        ---------------------------

Item 6. Exhibits and Reports on Form 8-K.
------  --------------------------------

        (a)  Exhibits:

             Financial Data Schedule

        (b)  Reports on Form 8-K:

             During the three-month period covered by this report, one
             current report on Form 8-K was filed:  January 20, 1999,
             reporting that NS and CSX had agreed on June 1, 1999, as
             the Closing Date for the Conrail transaction.


<PAGE> PAGE 20


                                SIGNATURES
                                ----------

     Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.



                                    NORFOLK SOUTHERN RAILWAY COMPANY
                               ------------------------------------------
                                              (Registrant)




Date: May 12, 1999             /s/ Sandra T. Pierce
      -------------------      ------------------------------------------
                               Sandra T. Pierce
                               Corporate Secretary (Signature)




Date: May 12, 1999             /s/ John P. Rathbone
      -------------------      ------------------------------------------
                               John P. Rathbone
                               Vice President and Controller
                               (Principal Accounting Officer) (Signature)


<PAGE> PAGE 21


                             INDEX TO EXHIBITS
                             -----------------

Electronic
Submission
Exhibit
Number                     Description                         Page
-----------  -----------------------------------------         ----

   27        Financial Data Schedule                            22

             (This exhibit is required to be submitted
             electronically pursuant to the rules and
             regulations of the Securities and
             Exchange Commission and shall not be
             deemed filed for purposes of Section 11
             of the Securities Act of 1933 or
             Section 18 of the Securities Exchange Act
             of 1934.)


<PAGE> PAGE 22