I think there were several things that killed Ms. Phoebe Snow:
1. Management. Now don't get me wrong, the EL was very well managed...during the White years. One problem was that Maxwell, while a competent and fairly good executive, wasn't all that aggressive. White was aggressive when it came to slashing costs (just look at the NJ commuter subsidies), and surely his aggressive nature would have helped during the Penn Central merger. Erie Lackawanna's people tried, but they just didn't stress the severity of the situation. If White had been alive, he would have made Washington quite aware of what would happen because of the Penn Central merger, and likely he would have gotten the EL some more concessions. Perhaps the EL would have taken control Campbell Hall-Pougkeepsie line, and maybe they would have forced the PC not to divert traffic away from Maybrook. Saunders, being the "great" compromiser that he was, would have more than likely said "yes" in order to gain ICC support (much to the chagrin of Perlman).
2. The Maybrook Obsession. The Erie Lackawanna should have given up on Maybrook by 1970. When it became obvious that Penn Central didn't wish to shorthaul itself and that the EL could do nothing, the EL should have made an out of court settlement with the PC. The EL sued Penn Central for $6.6 million in damages and filed to have the Maybrook Gateway reopened. It failed in getting the $6.6 million, but it "succeeded" in getting traffic through Maybrook. But shippers were terrified of the Penn Central's awful service, so few switched back, and those who remained preferred PC's single-line service. If the PC had agreed to pay $6.6 million dollars in damages in exchange for the EL giving up on Maybrook, it would have been beneficial for both parties. After all, the EL was actually losing money on the Maybrook line from 1971 to 1974 despite the reopening. If they had just given up on Maybrook, they would have saved money in terms of maintenance, crews and equipment.
3. The Urge to Merge. The Erie Lackawanna tried to force itself onto a variety of railroads (most notably N&W-C&O and even Pennsylvania-New York Central) in the vain hope that they'd be forced to merge. Unfortunately, they forgot about "arms-length" mergers like DERECO. If they had focused on further cutting costs and streamlining operations then they would have become a diamond-in-the-rough for merger partners who wanted to operate to New York.
4. The inability to Upgrade Marion Yard. If the Erie Lackawanna had entered into an agreement with Chessie to Upgrade Marion, ala. Bison in Buffalo, it could have saved $3.5 million dollars a year. Why Chessie? Chessie was trying to merge with the N&W, it served Marion, and it was having troubles in Cincinnati. Perhaps if the Erie Lackawanna had agreed to let Chessie pre-block some of its Cincinnati bound traffic at the Upgraded Marion terminal, Chessie wouldn't have built Queensgate in the 1980's.
In the words of the (in)famous film "Pulp Fiction," "It's the Little Differences..."