Posts Tagged ‘Amtrak finances’

Amtrak Looking Toward Post Pandemic World

April 25, 2020

Amtrak management is studying a number of scenarios for ramping service back up once the COVID-19 pandemic has passed.

In the meantime, though, the passenger carrier expects to lose $700 million in adjusted operating earnings as a result of the pandemic.

Amtrak Chairman Anthony Coscia along with new CEO William Flynn and Executive Vice President Stephen Gardner gave those assessments during a conference call with news reporters.

Amtrak ridership across its system has fallen by 95 percent and it has suspended 57 percent of its services.

Amtrak is receiving $1 billion in emergency federal aid and Coscia said that assistance will enable Amtrak to avoid having to tap its capital reserves and avoid employee layoffs.

He said that before the pandemic began Amtrak was “on track” to break even in operating earnings by Fiscal Year 2021 for the first time in the railroad’s history.

That figure counts as revenue funding that Amtrak receives from various state governments to operate corridor service.

Flynn said the carrier has been taking advantage of the lower ridership period to perform track work and other “critical” projects.

In looking to the future, Flynn said Amtrak officials are studying touchless technology at fare gates and changing some food service.

One idea being explored is enabling passengers to pre-order food and beverages from café cars.

Flynn said Amtrak expects it will take three months or more for ridership to return to pre-pandemic levels.

It is not clear when that clock would start. Some governors have been talking in recent days about easing social distancing restrictions on or after May 1, although some forms of social distancing are expected to remain in place either by mandate or recommendation.

Flynn said Amtrak has been researching various ideas of what the pandemic recovery will look like and have created several service plans based on “surveys of customer sentiment.”

In some instances, Flynn indicated, Amtrak will “introduce product ahead of demand.”

“We have to demonstrate to our customers that we have an attractive product that they will value when they come back,” Flynn said.

Gardner said Amtrak is looking at implementing new ticketing kiosks and text messaging to inform passengers where to head once they arrive at their station.

The downloadable schedules that have been removed from the Amtrak website will be reintroduced once services are restored.

Flynn said none of Amtrak’s unions have thus far shown an interest in delaying or giving up negotiated wage increases.

“But we continue to work with union leadership so they understand where we are in this crisis and how we are going to move forward,” he said.

Trains magazine reported that Amtrak spokesman Marc Magliari said 58 percent of onboard service employees are on an extra board that guarantees them 150 hours per month of work.

Regularly assigned employees are guaranteed a 180-hour month, so their pay cut works out to about 16 percent.

“Engineers and conductors have a 40-hour-a-week guarantee, but many of them previously worked assignments that included overtime, which has been reduced,” Magliari said.

Pennsylvania Congressman Challenges Amtrak’s Description of How Well it is Doing Financially

March 6, 2020

An Amtrak vice president found himself under fire Wednesday by a skeptical congressman who expressed doubt that Amtrak’s finances are as strong as the carrier says they are.

Rep. Scott Perry (R-Pennsylvania) told Amtrak’s Stephen Gardner that he took issue with Amtrak’s description of its finances.

Perry said $235 million that states provide to Amtrak to operate corridor services are subsidies and not passenger revenue.

He also expressed doubt about Amtrak’s claim that it is close to breaking even on an operating basis.

In particular, Perry said Amtrak’s net revenue figures fail to account for $870 million in depreciation in 2019. “This represents a loss of over a billion dollars,” Perry said.

In response, Gardner, who is a senior vice president and chief operating and commercial officer, said the payments are “very transparent.”

He said depreciation is “a cost primarily associated with our vast Northeast Corridor infrastructure funded by the federal government.”

A analysis posted on the website of Trains magazine said Gardner was in effect admitting that the full costs of operating trains in the Northeast Corridor don’t enter into the profit-loss equation that Amtrak presents.

The exchange occurred during a meeting of the House Railroads, Pipelines, and Hazardous Materials Subcommittee.

The committee heard from six witnesses as it continues to work toward approval of surface transportation renewal legislation. The current surface transportation law expires on Sept. 30.

Rep Steve Cohen (D-Tennessee) continued to complain about Amtrak’s onboard dining services, saying he still hasn’t received any survey data from Amtrak that justified food service downgrades on eastern trains.

That comment was in reference to Amtrak’s replacement of full-service dining cars on overnight trains in the East, Midwest and South with a service now known as flexible dining.

Sleeping car passengers are served food prepared off the train in lieu of meals freshly prepared aboard the train.

Cohen said all he has heard from Amtrak passengers is that they don’t like the food, which is heated in a microwave oven.

“Millennials may like to look at their phones, but they don’t like bad food either,” Cohen said. “You need to put that back and attract more customers.”

In response Gardner said Cohen should receive the survey information by the end of the week.

“We have a variety of different services, and that requires us to experiment and try new ways to meet the requirements and needs of our traveling public,” Gardner said.

“We will continue to experiment to find the right mix, the right balance. For sure we know passengers expect a much broader set of food options — healthier choices than the historic railroad menu that had been offered. We also know people prefer a variety of different environments to eat in; it’s become quite clear that many people prefer to be served in their own rooms or to be able to use the dining car in a more flexible way.”

During his testimony Gardner appeared to contradict the feasibility of a plan put forth recently by U.S. Secretary of Transportation Elaine Chao that Amtrak should repair the tunnels leading into New York City from New Jersey beneath the Hudson River before building a new tunnel.

Amtrak and various public agencies in the two states have been seeking federal funding for a massive multibillion project to upgrade infrastructure in the Northeast Corridor.

The Gateway project includes building new Hudson River tunnels.

But federal officials have been resisting giving the project federal grants and have suggested the states need to greatly increase their financial contribution to the project.

Gardner initially tried to duck being critical of Chao’s proposal before finally acknowledging during questioning that he didn’t think rebuilding the existing tunnel before building a new one was a viable idea.

“We have to be able to excavate the current track structure, repair the drainage underneath, and inspect the tunnel lining — which hasn’t been looked at, frankly, in 109 years,” Gardner said.

“To do that during a four-hour slot in the evening or on a 55-hour weekend outage scenario could present incredible difficulty … which is why we have always proposed to do a full rehabilitation of the tunnels once new tunnels are in place, allowing us to maintain all of New Jersey Transit and Amtrak service.”

Rep. Stephen Lynch (D-Massachusetts) ripped Amtrak for using non-union contractors at a Chicago worksite.

“It shakes my confidence in Amtrak … With all the challenges we have,” Lynch asked, “do you really want to pick that fight to try to save a couple of bucks by bringing in workers who don’t have ongoing regular training on rail systems? As an iron worker, it’s a very different environment when you’re working on a live transportation system.”

Lynch is a former iron worker and organized labor official.

Anderson May Be Leaving Amtrak in 2020

January 3, 2020

Buried in a recent Wall Street Journal article about the challenges that Amtrak faces in 2020 was for some a potential bit of good news.

The president and CEO that many rail passenger advocates love to hate, Richard Anderson, may be leaving the company this year.

The article said Anderson’s potential departure is among the challenges Amtrak is facing this year.

Although no details were provided in the Journal article, Anderson is reported to have a three-year contract that expires this year.

Anderson, 64, a former Delta Air Lines CEO, came to Amtrak in June 2017 and for several months served as co-CEO along with the now retired Charles “Wick” Moorman.

Amtrak Chairman Anthony Coscia would not comment to the Journal about Anderson’s potential departure other than to say the passengers carrier “takes succession planning very seriously, and its ability to attract world-class CEOs also brings with it the responsibility to assure there’s continued leadership at that level.”

Whether Anderson continues to lead Amtrak through and past 2020 may not matter if the carrier continues on its current path of emphasizing the pursuit of profitability or at least break-even operation.

Amtrak has touted its fiscal year 2019 operating loss of $29.8 million as the best financial performance in Amtrak’s nearly 50-year history.

Anderson has repeatedly spoke of breaking even in 2020, although it should be noted Amtrak counts its federal funding as revenue.

The Journal article noted that some members of Congress have been critical of Amtrak’s financial strategies, saying the carrier’s overall service has suffered.

Although Anderson doesn’t give many interviews, in those that he has, including with the Journal, he has spoken about shoring up Amtrak finances as a way to gain credibility in Congress so it can ask for and receive millions if not billions of new money for capital projects, including replacement of aging tunnels and other infrastructure in the Northeast Corridor.

Amtrak’s future will be a major topic of conversation in Washington this year because Congress may act on a new multiyear highway bill that is expected to include reauthorization of the federal grant programs that fund Amtrak.

The reauthorization, which would replace the current FAST Act, may contain policy directives that govern Amtrak’s operations.

The FAST Act expires in 2020. It is a five-year surface transportation law that funds road, rail and transit programs.

The Journal article noted that some Capitol Hill observes are skeptical that Congress will be able to agree on a new transportation bill during a presidential election year.

They base that on the reality that raising the gasoline tax will be part of that discussion and many lawmakers are loath to do that.

The federal gasoline tax funds most highway construction and has not increased since 1993.

Anderson and senior vice president Stephen Gardner, who may be Anderson’s replacement if he steps down, have articulated a vision in which Amtrak downgrades long-distance routes in favor of shorter corridor services between major population centers.

Although Anderson has spoken about retaining some long-distance routes as experiential services, he has also indicated that the passenger carrier may seek congressional approval this year to experiment with restructuring at least one long-distance route.

In an interview with the Journal, Amtrak Chairman Coscia sought to frame the changes Amtrak is eyeing as a way to provide better service to underserved regions.

“What we’re after here is the person who lives in Atlanta or Charlotte, who doesn’t have train service,” Mr. Coscia said. “The person who has to wake up at 3 in the morning in Cleveland to take a train.”

Amtrak management has yet to formally release a plan for doing that although Anderson has hinted that in advance of congressional action on a new Amtrak authorization the passenger carrier will release more specific details about its plans.

Gleaning Insights Into Mr. Anderson

July 11, 2019

Amtrak CEO Richard Anderson is not one for giving interviews so much of what we know about his views of the future of his railroad must be gleaned from his public behavior and statements made in Congressional hearings.

The Wall Street Journal recently published a profile of Anderson that portrayed him as being stubborn, focused and the type of person who loves a good fight.

The article mentioned a June 2018 meeting that Anderson had with a group of six U.S. senators and one congressman about the fate of the Chicago-Los Angeles Southwest Chief.

At the time, Amtrak was proposing operating the train between Chicago and Dodge City, Kansas; and between Los Angeles and Albuquerque.

Passengers would ride a bus for the 475-mile gap between Kansas and Albuquerque.

The sticking point was Amtrak’s refusal to pay to install positive train control on the BNSF route over Raton Pass near the Colorado-New Mexico border.

BNSF has little to no freight traffic on the route and won’t pay for it and Anderson told the lawmakers that the PTC issue was for Amtrak a “math problem.”

Anderson repeatedly insisted Amtrak would implement “alternative solutions.”

The Amtrak CEO’s intransigence angered Senator Martin Heinrich of New Mexico. He angrily walked out of the meeting after saying, “These are not solutions. “These are not solutions our constituents deserve!”

The newspaper suggested the meeting illustrated how Anderson’s doggedness can become arrogance.

“There was zero deference [on Anderson’s part],” the newspaper quoted one person who was in the Southwest Chief meeting as saying of Anderson.
As it turned out, the senators pushed through a clause in Amtrak’s fiscal year 2019 appropriation mandating the Chief to remain an all-rail operation until at least Sept. 30, 2019.

There are a number of takeaways from the article that provide some insight into Mr. Anderson’s thinking.

He came to the passenger carrier determined to cut costs, streamline operations and reduce Amtrak’s deficit.

In short, Anderson is laser focused on efficiency, increasing revenue and seeking to do something that has never been done at Amtrak in its 48-year history even if his predecessors often talked about it: Breaking even.

The article suggested that Anderson was brought aboard at Amtrak after an airline career that included serving as CEO at Delta and Northwest specifically to stabilize the railroad’s finances and improve its reliability.

Anderson said that by cutting costs and teasing new revenue from the carrier’s commercial partners Amtrak could reduce its operating loss from $170.6 million in 2018 to zero by 2021.
The article said Amtrak’s annual adjusted operating loss, which excludes capital expenditures and some other costs, will fall to zero over the next year.

“We took many steps to streamline the company so that we could free up investment in the core product,” Anderson in an interview with a WSJ reporter.
The carrier has been building up cash as it prepares to invest in infrastructure repairs and new equipment.

Anderson is not opposed to public funding and noted that all modes of transportation benefit from it.

He told the WSJ reporter in an interview that he knows from his experience in the airline industry about dependence on government-funded infrastructure.

“No one thinks twice about the fact that the federal government maintains the locks and dams system on the Mississippi River, right?” he said.

As Anderson sees it, what is at stake is credibility with Congress. That, in turn, will result in a greater likelihood that lawmakers will agree to requests for funding for new rail passenger cars and infrastructure projects in the Northeast Corridor.

He also argues that if Amtrak is in a better financial position it will be better able to attract private investors to help fund those projects.

Next year Congress will take up reauthorizing Amtrak and there are bound to be conflicts over its finances and the level and type of services that it provides.

In Anderson’s eyes, the Northeast Corridor is profitable and the long-distance routes are not. Hence, Anderson may believe that the latter are a barrier that needs to be surmounted to reach the break-even point if not profitability.

Critics have taken issue with Anderson and Amtrak’s assertions of how profitable the Northeast Corridor is and how much money the 15 long-distance trains lose. But that is a debate for another time.

The WSJ article listed a number of cost cutting measures that Anderson has imposed since coming to Amtrak in July 2017.

It has quit some travel industry trade groups, cut nearly 200 consultants and ended 400 management positions in a 2017 buyout.

Scores of phone and fax lines were removed and Anderson canceled a plan to spend hundreds of millions of dollars building a dedicated wireless network along the Northeast Corridor to improve Wi-Fi service.

He also discarded a project to place TV screens in the seat backs of Amfleet cars.

Some cost cutting moves have raised the ire of unions representing Amtrak workers including the closing of a California call center and plans to reduce the ranks of the Amtrak police department.

Private car owners howled in protest when Amtrak increased charges to carry private rail cars and sharply decreased the number of stations at which private cars could be added or removed from a train.

As Anderson saw it, doing the latter at intermediate points was a source of delay to Amtrak trains.

And, of course, there is the on-going fight over the carrier’s long-distance trains.

Anderson acknowledged that he hasn’t won every battle.  “Everything takes longer than I want it to take,” he said.

The article portrayed Anderson as unapologetic about his efforts to force Amtrak to change and his willingness to forge his own path forward even if that makes him something of a lone wolf.

While at Delta he pulled the airline out of an industry trade association because he disagreed with its position of privatizing the air traffic control system in the United States.

Safety has been a major concern of Anderson’s but his airline centric views have raised hackles in a railroad world used to doing things in certain ways.

Anderson has pushed Amtrak’s host railroads to work harder and faster to install and implement positive train control systems.

Under his watch, Amtrak has sought to borrow some safety practices from the airline industry, notably imposing a no-fault method of reporting risks and near misses.

But implementing another proposal that Anderson favors will require talking the Federal Railroad Administration into changing its rules. That could be a tall order.

The FRA prohibits the use of cell phones, tables and screens in locomotive cabs, arguing that they could be a distraction to locomotive engineers who must remain focused on the track ahead of them.

Those rules were adopted after cell phone use and texting were implicated in a series of fatal accidents.

Anderson believes that tablets containing moving map displays would help locomotive engineers in the same manner that use of tablets in airplane flight decks provide pilots with weather alerts and other advisories.

Yet one locomotive engineer quoted by the WSJ who opposes the idea underscored the challenge facing Anderson in trying to change railroad safety culture. “A cow can’t walk in front of you at 30,000 feet,” he said.

Amtrak Touts Increased Ridership in FY2019

May 3, 2019

Amtrak said this week that ridership in fiscal year 2019 is up 1.3 percent over where it was in March 2018 and that the passenger carrier is on pace to reach the break-even mark in operating earnings by FY2021.

If the performance thus far holds up for the remainder of FY2019, Amtrak said this would make its best performing year in its 48 years of operation.

President Richard Anderson said in a statement that Amtrak is experiencing record growth and is seeking to develop new markets that now have limited or no intercity-rail service.

Anderson’s statement spoke of a changing landscape in America.

The news release also said that Amtrak is investing billions of dollars into modernizing its aging infrastructure, fleet and facilities as much of its rolling stock and locomotives near the end of their useful lives.

Some infrastructure that Amtrak uses dates to the early 1900s.

Amtrak Touts FY2018 Performance

November 19, 2018

Amtrak proclaimed in a news release last week that it posted the best performance in its 47-year history.

The carrier said that it ended the fiscal year on Sept. 30 with an operating loss of $168 million, which it said was a 13 percent improvement over FY2017

The loss is based on adjusted earnings and excluded depreciation and other expenses.

Amtrak CEO Richard Anderson told Bloomberg News that the railroad’s losses would likely have been less than $100 million if not for a December 2017 derailment of a Cascades train in Washington state and a February 2018 derailment in which the southbound Silver Star was inadvertently routed into the path of a parked CSX auto rack train.

Amtrak said its ridership in FY2018 narrowly missed setting a record with 31.7 million trips. Revenue increased 2.2 percent to $3.4 billion.

Other points that Amtrak made in its news release included spending in $1.46 billion in capital investment, which it called  “the highest level . . . in recent history.

In the past year Amtrak has installed positive train control on more than 13,000 miles of the Amtrak network and spent more than $51 million spent on ADA-related projects at more than 100 locations nationwide.

Ridership aboard regional and state-supported trains posted gains, but long-distance train ridership fell 3.9 percent.

Amtrak attributed that loss “to the hundreds of trains truncated or canceled due to weather events, infrastructure outages, planned repairs, and poor on-time performance across much of the host railroad network used by Amtrak trains.”

RPA Hits Amtrak Accounting Practices

August 27, 2018

A rail passenger advocacy group is trying to put Amtrak’s accounting practices back into the spotlight.

The Rail Passengers Association released a white paper last week that concludes that how Amtrak measures and allocates its revenues and costs is “catastrophically flawed” and does the American public a disservice.

RPA is hardly the first critic of Amtrak’s accounting, which has come under fire for years by critics and policy makers.

In the RPA white paper, Amtrak’s bookkeeping practices are said to have four major flaws.

Amtrak is described as allocating costs in a way that inaccurately portrays the economics affecting each part of the system without reporting avoidable costs, as required by law.

It also omits all costs of capital consumption and uses imprecise or inadequate data.

“The upshot is that APT exaggerates the cost of operating the national passenger train system, overstates the costs of expanding it, and trivializes the effects of killing it, because it fails to consider the benefits accruing to the communities it serves,” the report concludes. “In short, it radically undercuts the ability of Congress and Amtrak to plan wisely.”

One practice singled out is allocation of track maintenance costs to routes that do not use the given tracks.

The report also said that some Acela equipment maintenance costs are allocated to non-Acela routes.

Amtrak is said to fail to determine each route’s fuel cost and to report reliable station cost data for stations that the carrier owns or maintains.

The carrier fails to accurately count commuter rail passengers using Amtrak-owned stations, thus overcharging the Amtrak trains that use them.

RPA said Amtrak’s accounting practices make the Northeast Corridor system appear less costly than it is while making long-distance trains appear to cost more than they do.

The funding needs of the Northeast Corridor greatly overshadow those of the rest of the system, where the majority of infrastructure costs are underwritten by Amtrak’s host railroads

This results in the false assumption that eliminating long-distance routes would substantially cut Amtrak’s public funding needs.

Amtrak Seeking $1.7B in FY 2019

February 26, 2018

Amtrak is seeking $1.7 billion in federal funding for fiscal year 2019, which is considerably more than the Trump Administration has proposed that it receive.

The passenger carrier’s budget request is similar to what Congress authorized for it in the Fixing America’s Surface Transportation Act of 2015.

The funding request includes a long list of proposed capital improvement needs, including $6.272 billion for the proposed new Hudson River tunnels, and seeks changes to federal law that the carrier said will improve its cost recovery and operations.

The administration has proposed slashing Amtrak funding by almost two-thirds, from $1.5 billion to $538 million.

Amtrak usually does not receive all of what it requests from Congress. Due to the inability of lawmakers to approve an appropriations bill, Amtrak’s current funding is based on its fiscal year 2017 allocation because FY 2018 spending has been handled in a series of continuing resolutions. The federal fiscal year ends on Sept. 30.

The Fiscal Year 2019 General and Legislative Annual Report to Congress projects that Amtrak’s funding needs will increase to $2.1 billion by fiscal 2023.

Northeast Corridor funding will rise from $543 million in FY 2018 to $966 million in 2023. The National Network, which includes long-distance and state-supported corridor trains, is expected to see its funding needs drop from $1.157 million to $1.134 million.

Trump Wants to Cut Amtrak Funding in Half

February 14, 2018

Here we go again. The proposed fiscal year 2019 federal budget released this week by the Trump administration proposes cutting in half the federal funding for Amtrak.

As the administration did a year ago, it is taking aim at long-distance trains, calling for funding of those to be slashed and for states served by the trains to pick up that funding.

But even the Northeast Corridor would face federal funding cuts, seeing its funding reduced from $328 million to $200 million.

Total Amtrak funding would be $538 million. Congress appropriated $1.2 million for Amtrak in the current fiscal year, which runs through Sept. 30.

The Trump administration proposed a similar budget cut for Amtrak last year, but Congress ignored it.

Amtrak issued a statement saying the proposed cuts would negatively affect the more than 31 million people who ride Amtrak.

“As the budget process progresses, we look forward to working with the administration, Congress, state partners and other stakeholders to consider these proposals and the impacts they could have on this important part of the nation’s transportation system,” the passenger carrier said.

Amtrak said it remains focused on running efficiently, saying that it covered 94.7 percent of its total network operating costs through ticket sales and other revenues in fiscal year 2017, but it must rely on some level of federal funding.

In a 160-page budget narrative submitted to Congress, the White House Office of Management & Budget said that having states share the burden of funding Amtrak would make “states more equal partners with the federal government, and would strengthen the responsiveness of Amtrak to the communities they serve.”

The narrative contends that along with cuts to Amtrak funding the administration “proposes reforms to Amtrak to improve efficiencies and effectiveness of long-distance routes.”

“State contributions to long distance routes is only one tool in the menu of options,” the administration said it will be exploring.

Amtrak Set Revenue Record in November

December 14, 2017

Amtrak said this week that it garnered record revenue in November of $204.7 million in system-wide adjusted ticket revenue, the best month in the company’s history.

In a news release, Amtrak said that Thanksgiving continued to be its busiest week of the year with a record 777,897 riders riding the train and generating $61 million in gross ticket revenue.

“More customers are choosing Amtrak as it is simply the smarter way to travel. We look forward to providing the Amtrak experience to more customers over the December holidays,” said Amtrak Co-CEO Charles “Wick” Moorman in a statement.

Amtrak said it is encouraging passengers to make their reservations now for Christmas season travel because it expects its trains to carry heavy crowds this month.

Passengers can save up to 25 percent on tickets, as 7-day and 14-day advance purchase saver fares are still available, the carrier said.