The company was sold on February 4, 2000 and merged into RailAmerica.
Railtex was founded in 1977 by Bruce Flohr a business that leased rail cars. Flohr had invested $50,000 of his own money and had investor help for another $50,000 from investors. Flohr had started as a Southern Pacific train-crew brakeman in 1965 and rose to superintendent of Southern Pacific's San Antonio Division until he became deputy administrator of the Federal Railroad Administration in 1975.
Seeking to broaden the revenue base he purchased the San Diego and Imperial Valley Railroad. Operating the railroad the company quickly developed a formula for a series of successful takeover the short line railroad including:
- Taking over only railroads where he could operate on a non-union basis - Railtex trains operated with two employees paid $10 to $15 an hour while union trains operated with three to four paid an average of $25 an hour. Railtex employees were called transportation specialists or "transpecs,"
- Deploying three marketing managers rather than the usual one for the line and then marketing to businesses five to 10 miles from the track as opposed to the usual next the track customers
- Purchasing older locomotives which could be acquired for a fraction of new locomotives.
In 1986 it acquired its second Austin and Northwestern Railroad.
In 1989 it sold its rail car business to Chrysler.
The company went public in 1993 trading on NASDAQ under the sign RTEX.
At the time of its acquisition by RailAmerica it had 26 railroads over approximately 4,100 route miles in the southeastern, midwestern and New England regions of the United States, as well as Eastern Canada and Mexico. The acquisition was valued at $325 million.