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2/1/2002



Rail News: Amtrak

Amtrak to cut 1,000 jobs, reduce capital spending — and possibly all unprofitable routes


In what could turn out to be a last-ditch effort to save Amtrak as it exists — or show Congress a good-faith effort toward fiscal responsibility before it receives Amtrak Reform Council’s restructuring recommendations next week — the national passenger railroad Feb. 1 announced a $285 million package of spending reductions and capital investment deferrals, including 1,000 job cuts and, possibly, suspension of all money-losing routes in October.



"Everyone knows that you can’t make a profit while running a network of unprofitable trains, but that is exactly what we’re expected to do," said Amtrak President and Chief Executive Officer George Warrington in a prepared statement.



Amtrak’s FY2001 $1.1 billion operating loss was $129 million higher than FY2000’s loss, and the largest loss in the company’s history, according to U.S. Department of Transportation Inspector General Kenneth Mead’s 2001 Assessment of Amtrak’s Financial Performance and Requirements, published Jan. 24.



"By 2003, Amtrak must reduce its cash losses by more than $300 million in order to meet its deadline for achieving self-sufficiency," states the report.



Amtrak plans to make up some of that lost ground by deferring $175 million in capital investments including equipment refurbishment and overhauls, capacity and reliability improvements, and technology, station and facility upgrades. Deferred projects would not include those planned for safety, environmental or reliability purposes — including badly needed fire- and life-safety improvements in New York City-area tunnels.



The railroad also plans to reduce its operating expenses by $110 million by cutting its management roll 10 percent, or 300 employees. Another 700 employees would be cut from labor agreement-covered positions (about 3 percent of that body). The job cuts are expected to be accomplished during the next few months, following other, previously announced layoffs, says Amtrak spokesman Kevin Johnson.



In addition, Amtrak plans to freeze or reduce spending for hiring, travel, vehicles, discretionary training, marketing and advertising, computers, materials, and supplies.



Meanwhile, the railroad plans to request $1.2 billion in federal appropriations for "basic needs to manage and operate today’s system in FY2003," according to Amtrak’s statement, adding that the funds would cover $840 million in basic and mandatory capital investments, $200 million to subsidize unprofitable long-distance service, and $160 million to cover excess railroad retirement taxes. It would not, however, address the railroad’s $5.8 billion capital investment backlog, which would be required to improve service or trip times.



If Congress does not appropriate that amount, Amtrak announced it would eliminate unprofitable long-distance service as early as Oct. 1; routes to be cut would be announced March 29 for contingency purposes.



Such action would enable Amtrak to operate only some of the Northeast Corridor’s routes. Services Amtrak operates under contract to transit agencies, like Caltrain, Sound Transit and MARC, would not be affected.



In his report, Mead cautioned that Amtrak could "take other draconian measures, such as widespread employee or service cuts." But such tactics would be questionable.



"Not only would Amtrak’s victory be hollow in the short term, but the sacrifices made to achieve the immediate goal would compromise the physical and financial integrity of any future passenger rail company, be it Amtrak or another entity or entities," said Mead.



Kathi Kube


Contact Progressive Railroading editorial staff.

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