Posts Tagged ‘CARES Act’

OIG Finds Amtrak Handled CARES Funds Well

December 21, 2020

The Amtrak Office of Inspector general has found the passenger carrier has made effective use of its federal CARES Act relief funds.

The OIG said there were some flaws in how Amtrak addressed use of those funds for state-supported intercity rail passengers service but otherwise the carrier has been effective in its use of and accounting of relief funds.

Amtrak received $1.018 billion in CARES Act funding and through October had spent about 87 percent of that money.

Amtrak underreported its use of the funds set aside for state-supported costs by about $686,000 out of a total of $97 million, the OIG audit found.

The OIG report said Amtrak’s finance department has since revised its reporting to more accurately reflect the remaining funds.

In another finding, the OIG said Amtrak could more consistently apply its coronavirus paid leave policy.

Amtrak Predicts 72% Ridership Drop in FY2021

October 22, 2020

Amtrak now expects ridership in federal fiscal year 2021 to be 72 percent below what it was in FY 2019.

Speaking before the Senate Commerce Committee, Amtrak CEO William Flynn said the passenger carrier expects to carry 9 million passengers in the current fiscal year. In FY 2019 Amtrak handled 32.5 million passengers.

In earlier statements, Flynn had projected the carrier would handle just half of its normal ridership in FY 2021.

Even the more pessimistic ridership numbers that Flynn presented this week are based on the assumption that by mid 2021 there will be an effective and widely distributed vaccine for the COVID-19 virus.

He acknowledged that this scenario “is not a guaranteed outcome.”

Amtrak and other public carriers, including airlines, have attributed massive ridership plunges to the COVID-19 pandemic depressing the market for travel, particularly business travel.

Flynn testified that in April daily ridership nosedived to 4,000 daily riders. This week it had rebounded to 17,000 per day, but before the pandemic it had been 80,000 per day.

Amtrak has said that preliminary figures show that in FY 2020 ridership has fallen by 97 percent and revenue by 53 percent.

Flynn said Amtrak revenue under the 9 million passengers for FY 2021 scenario would be $598 million. In FY 2019 Amtrak earned $2.4 billion.

He implored the committee to support granting Amtrak $2.8 billion in emergency aid by December.

Otherwise, Flynn said, Amtrak will have to delay capital projects and cut 2,400 more jobs.

Amtrak also has asked Congress to grant it $4.9 billion in FY 2021. The carrier had asked back in February for $2 billion for the 2021 budget year, which runs from Oct. 1 to Sept. 30.

Earlier this month Amtrak scaled back operation of all long-distance trains except the Auto Train to three times a week and furloughed 2,000 workers or about 10 percent of its workforce.

Flynn sought to frame those service reductions and staff furloughs as necessary to avoid deficit spending of up to $250 million a month in cash.

“At this rate of cash depletion, Amtrak would be forced to take even more drastic measures with long-lasting impacts on our company, our employees, and our network,” Flynn said.

Noting that emergency aid and additional appropriations from Congress has not been forthcoming, Flynn told the committee, “We must be prudent and address the situation at hand.”

Congress granted Amtrak $1 billion in emergency aid in March as part of the CARES Act, but Flynn said most of that money has since been spent and without additional assistance Amtrak faces the prospect of being forced into bankruptcy.

Some committee members expressed sharp criticism about Amtrak’s reducing the service levels of its long-distance trains.

 “Part of the skepticism that occurs at least with me, and maybe my colleagues, is that previous CEOs of Amtrak were less committed to long-distance passenger service,” said Senator Jerry Moran (R-Kansas).

 “So when the three-day [operation] arrives it raises concerns that this is another circumstance in which we’re just being played, that this is the continued effort to eliminate or significantly diminish the service.”

Committee Chairman Roger Wicker, R-Mississippi., noted that Amtrak’s “temporary suspension” of The Sunset Limited along the Gulf Coast has lasted 15 years.

Nos. 1 and 2 were suspended between New Orleans and Orlando in the aftermath of Hurricane Katrina.

Senator Sen. Maria Cantwell (D-Washington) said, “We don’t want to see what the chairman’s talking about — some incident that basically sets a course where service is curtailed and then it takes you 15 years to get it re-established.”

Senator Jon Tester (D-Montana) expressed concern that in the absence of daily train service the public would choose other travel modes and may not return to Amtrak when full service is restored.

Flynn insisted, as he did in a House committee hearing in September, that Amtrak had no intention of making the service reductions permanent.

He said Amtrak would evaluate ridership and finances in February and might begin to restore daily service in May “when financially possible.”

Amtrak is not the only transportation-related agency seeking emergency funding from Congress.

Public transit agencies have asked for $36 billion, privately-owned school bus and motorcoach companies want $15 billion, airports are seeking $10 billion, and airlines have requested $25 billion.

Most Airlines Agree to Emergency Aid Terms

April 15, 2020

The federal government has reached an agreement in principle with 10 airlines over terms of the federal emergency aid that they will receive.

A report by Aviation Daily said he carriers will receive a combination of grants and loans as part of the $25 billion allocated to them by the Coronavirus Aid, Recovery, and Economic Security Act.

The airlines had wanted all of the funding to come in the form of grants that they would use to pay employees through spring and summer.

However, 30 percent of the aid will be low-interest loans with 70 percent of the funds being grants.

The agreement also said the U.S. Department of Treasury will receive warrants equal to 10 percent of the amount of the loan, which the agency can later convert into shares at a pre-determined price should it desires.

Airlines agreeing to participate in the program include Alaska Airlines, Allegiant Air, American Airlines, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways, SkyWest Airlines, Southwest Airlines and United Airlines.

Spirit Airlines said it continues to negotiate with the government over terms of its application for emergency aid but expects to reach an agreement soon.

Treasury Secretary Steven Mnuchin said talks with other airlines are still ongoing, particularly smaller carriers.

The CARES Act requires that airlines accepting financial assistance cannot cut positions through layoffs or furloughs, but can reduce staff through voluntary incentives such as early-retirement or paid leave packages.

Airlines also are prohibited from repurchasing stock or issuing dividends through September 30. They must agree to certain limits on executive pay until March 24, 2022.

The carriers are required to provide minimum levels of service to all points in their pre-pandemic networks to the extent “reasonable or practicable.”

However, some airlines, including Alaska, Allegiant and United have sought waiver requests for exemptions to cease flying to certain points, citing weak demand due to the COVID-19 pandemic.

Amtrak Set to Get $1B in Pandemic Aid

April 13, 2020

The U.S. Department of Transportation said late last week that it will be conveying $1 billion to Amtrak that was appropriated as part of the Coronavirus Aid, Relief, and Economic Security Act.

The funding was approved by Congress after the passenger carrier reported that it was expected to lose that amount of money due to a 90 percent plunge in bookings and a wave of cancellations due to the COVID-19 pandemic.

In a news release, DOT said the emergency aid will help Amtrak maintain service when the economy recovers.

DOT said the CARES funding is intended to offset the loss of ticket revenue, enable the carrier to continue to pay its employees, buy fuel for its operations and construction materials for its projects.

The CARES Act funding will grant Amtrak $492 million for the Northeast Corridor and $526 million for its national network.

At $239 million of the funding will be used in lieu of any increase in states payments for Amtrak corridor service.