I was troubled today to read this article in Business Insider, which I think is quite misleading with regards to Amtrak’s need for continued government assistance. The headline of the article suggests Amtrak will “turn a profit” soon, while strikingly, the body of the article never explains how. Exactly how will Amtrak recover the $700 million plus in capital investments without government assistance?
I certainly hope columnists at Trains and the folks at RPA (formerly NARP) will try to correct this ridiculously misleading article.
Unlike some others on this forum I do not read through the details of Amtrak’s financial reports, but I have kept an eye on its ridership and revenue growth, and I have been thinking for the past few years that they might actually break even on operations one of these days. This is a feat that few (if any) North American public transit agencies (what Amtrak essentially is) ever achieve, and should not be downplayed.
But breaking even at the farebox is something completely different from being profitable. To truly achieve that feat you need to cover all your capital costs as well, which Amtrak shows no signs of doing in the near future.
I’ve since been told that Business Insider isn’t a very high-quality news outlet, that mainly just creates attention-getting headlines in order to sell ads and “clickbait”…
Mike, I am sure that those here who took part in the celebration remember it well. However, the news media give no evdence that they remember anything about it.
So, Amtrak’s operating revenue includes subsidies from the states as well as farebox receipts. But, that’s okay.
DC is generally “for” infrastructure investment (including capital for Amtrak) but “against” operating subsidies. They don’t care if state and local provide subsidy, as long is it’s not them.
Amtrak’s reported 2019 operating loss has not been formalized in its year end financials. It would not be unusual for the final 2019 numbers to be different, although the results probably will not change significantly. The trend toward an operating profit in 2020 is likely to continue.
Amtrak had an Adjusted Operating Loss of $168.1 million in 2018. But the operating results are only part of the financial picture. After factoring in depreciation, interest, OPEBs, state capital payment amortizations, etc., the fully allocated loss was $868.2 million.
According to reports in the Wall Street Journal, Fox Business News, CNN Business News, etc., Amtrak is reporting a 2019 Adjusted Operating Loss of $29.8 million, which is a significant improvement over 2018. But the total loss will be substantially higher.
Amtrak is still heavily dependent on the U.S. Government for grants, loans, etc. In 2018, the company received more than $2 billion in federal paid in capital. Approximately $372 million was used for operating purposes, with the balance devoted to capital improvements, i.e. new equipment, infrastructure, etc.
Amtrak is the largest single beneficiary of RRIF loans. It has borrowed more than $3 billion under the program at essentially the same rate as the U.S. Treasury weighted average borrowing rate.
The improvement in the company financials started on Joseph Boardman’s watch; they appear to be accelerating under Anderson’s watch.
Commercial airports are typically constructed using government bond issues at lower than corporate rates. Airlines are beneficiaries. Do their payments cover all operating costs and debt maintenance? Is there a problem with that?
Highways are also constructed using government funding and bond issues. Trucking and bus companies are beneficiaries. The fuel taxes are woefully short of funding capital or maintenance. Is there a problem with that?
I think they could be profitable at it. They need to be a lot more innovative and agile and they need a dedicated source of financing to get their house in order in the short term. I think dividing the railroad into corridors and LD trains is a good idea as it segregates state and federal funding and mandates a lot easier into seperate divisions. That probably makes Accounting and Financial Management easier as well. If they give Anderson a chunk of money for LD as well as decently fund Corridors and Corridor development, I think you would see break even in Corridors first followed by LD at some point. Right now Amtrak is severely cash starved and cannot even afford to experiment with the LD line in any meaningful way.
I would like to see Amtrak have enough freedom and money to attempt a second frequency of Auto Train. Halt the Sunset Limited and Cardinal. Bring back old LD trains or parts of LD train routes that now make sense. Spend some decent marketing money on determining if Amtrak station placement is in the right geographic market to maximize ridership, etc.
Additionally, would be great to have Amtrak start a consulting arm that could walk a state or group of states through the process of
CMStPnP wrote the following post[in part]: “…I would like to see Amtrak have enough freedom and money to attempt a second frequency of Auto Train. Halt the Sunset Limited and Cardinal. Bring back old LD trains or parts of LD train routes that now make sense. Spend some decent marketing money on determining if Amtrak station placement is in the right geographic market to maximize ridership, etc…”.
I’d like to place an order in the Dinner for a piece of pie in the sky,
CMStPnP wrote the following post[in part]: “…I would like to see Amtrak have enough freedom and money to attempt a second frequency of Auto Train. Halt the Sunset Limited and Cardinal. Bring back old LD trains or parts of LD train routes that now make sense. Spend some decent marketing money on determining if Amtrak station placement is in the right geographic market to maximize ridership, etc…”.
I’d like to place an order in the Dinner for a piece of pie in the sky,
What I see coming, perhaps ‘dramatically’ within a month of the mandate, is Amtrak dividing a given LD run into ‘corridors’ (for state co-funding’) and intervening sections that are preserved with ‘Federal interest’ in keeping a coherent long-distance network. What happens if a given State welshes on its “obligations” will be interesting to watch; what is reasonably certain is that Anderson et al. would have to be very, very careful not to blink, and also very, very carefully coordinate with the various State representatives in the Congress to keep intrusions from that quarter minimized and ‘on board with the Federal plan’.
The idea of the ‘consulting arm’ is a reasonable one, but not with Amtrak or its OIG being ‘in charge’. Better if the various Amtrak people are brought in as consultants or ‘experts’ and the coordination and project documentation handled by people from a less political and ‘involved’ source.
I also think that it might be possible to try an ‘Auto-Train lite’ between some of these city pairs by running a small number of appropriate auto-racks on the end of an existing consist, upping the power appropriately as more and more Genesis units become ‘surplus to ordinary requirements’, and see firsthand how demand develops, what its cyclical characteristics might be, etc. I doubt that any new ‘pure’ Auto-Train would cover the potential risk during its start-up phase, particularly if there were poor experiences or word-of-mouth in the first weeks and months.
Figures lie, liars figure. How much do you trust the integrity of those providing the figures - do they have ulterior motives in providing the figures they are presenting? What is their ultimate aim in the figures they provided?
Over on another blog a day ago, on a Web site far, far away, there is a discussion by space enthusiasts about how much space Shuttle launches had cost (the number is uncertain but it was a high figure) in relation to how much NASAs new Space Launch System is going to cost (again, no one can tell, but it probably will be an even higher figure).
The space-exploration-and-commercialization enthusiast community can at least talk about what the object of their enthusiasm will end up costing and whether non-enthusiasts who don’t fully appreciate why the enthusiasts are enthusiastic, will balk at the price tag in the end. They also talk about whether their are alternatives to the NASA proposals involving public-private partnerships or whether those approaches have their own limitations.
I’ve noticed many times in various fields and disciplines that people who cannot summon facts, especially data, choose to denigrate those stats, whatever their type. Most people have zero understanding of statistics or accountancy, having never taken even one course. So whether from ignorance or irritation at being incapable of rationally disputing another’s opinion, the old adage “shoot the messenger” applies.