Amtrak Reforms Paying Off in Reduced Op Sup Reques

[jccollins]

News Release

National Railroad Passenger Corporation

60 Massachusetts Avenue NE

Washington, DC 20002

www.amtrak.com

FOR IMMEDIATE RELEASE

Contact: Media Relations (202) 906-3860

ATK-06-021

March 16, 2006

Amtrak Reforms Paying Off in Reduced Operating Support Request

Amtrak testifies that capital investments are key to improved

WASHINGTON - At a Senate Appropriations Subcommittee hearing today, Amtrak Chairman of the Board David M. Laney and Amtrak Acting President and CEO David J. Hughes, detailed the railroad's funding needs and reform plans for Fiscal Year 2007.

"Amtrak has reorganized, begun to rebuild the plant and equipment and has stabilized to a point where I believe we can now begin to address fundamental change aggressively in critical areas," said Laney, noting the railroad's progress since surviving a financial crisis four years ago. "This year and next are truly pivotal years for Amtrak in its implementation of strategic reform - and we are aggressively ushering in change at Amtrak."

Based on the railroad's continuing successful efforts to improve operational efficiencies and revenue growth, Amtrak is lowering its requested level of operating support for FY07 by $42 million to $498 million, compared to this year's operating support request of $540 million. The requested level of federal operating support is less than 20 percent of the railroad's operating budget.

For greater reliability of its infrastructure, Amtrak is proposing an increase in the funding of capital projects by $235 million, from $495 million presently to $730 million.

This will include a number of major one-time projects including a span replacement on the Thames River Bridge in Connecticut, upgrading of centralized dispatching systems, a Northeast Corridor Master Plan to determine other long-lead infrastructure requirements and other investments supporting the railroad's Strategic Reform Initiatives.

Combined with funding for working capital and debt servicing, the proposal for federal support totals $1.598 billion (see chart below), about equal to the railroad's funding of $1.3 billion for the current year, but for several extraordinary capital needs.

Amtrak proposes no new borrowing, and Laney in his testimony noted that the railroad has reduced its debt by about $300 million during the last three years.

In addition to the proposal for federal support, Laney outlined a series of strategic investment options to reduce congestion and improve the reliability of non-Amtrak owned rail, assist state corridor development and refinance some of Amtrak's debt, reducing costlier long-term obligations. Optional funding of these initiatives in FY07 would be $275 million.

Strategic Reform Initiatives

Laney reported that the railroad has made progress recently in reducing food service costs without adverse impact to the quality of the product. The railroad is under a mandate to do so, or face the possibility of its elimination on some trains. Laney also said that the railroad is continuing to explore outsourcing options for the service.

Amtrak is pursuing additional efficiencies, said Laney, through the closing and consolidation of some facilitates and outsourcing of certain support functions. Other reforms Laney said Amtrak is pursuing include re-evaluation of fleet utilization, improvements in customer service for better ridership and revenue growth and a comprehensive review of the railroad's long-distance network for improved financial performance or possible restructuring and reconfiguration.

"Our goal is to improve our customer service, to become more efficient at what we do, to reduce our unit operating costs while growing revenue, and to prepare ourselves for what we hope is a more competitive future environment for passenger rail," said Laney. The full testimony is available at www.amtrak.com/governmentaffairs.

About Amtrak

Amtrak provides intercity passenger rail service to more than 500 destinations in 46 states on a 22,000-mile route system. For schedules, fares and information, passengers may call 800-USA-RAIL or visit Amtrak.com.

 

[WICT106]

Hmmm. I'd like to see him and several of Our Elected Representatives take a round trip aboard the Capitol Ltd, one of the Silver Services, and then the Empire Builder, before making any statements regarding "diner lite." -_- <_< Let's see how well they tolerate what they force their customers to put up with.

 

[National Limited]

This is interesting. Didn't David Gunn regurally say that he wished to reduce operating support in increase capital support?

 

[WICT106]

Another thing I'd like to raise: In order to reduce the operating subsidies, one has to make efforts to bring about a State of Good Repair. In order to generate money from existing assets, cars had to be repaired and brought back from the "dead" line, and track along the various routes has to be maintained and improved upon. In order to really get the ball rolling, purchases of additional equipment and cars should be made, and additional frequencies of service levels should be increased along the several routes. for example, instead of only once per day each way, how about twice per day?

Of course, in order to make money, one has to spend money, and the past few administrations both Democrat and Republican have proven unwilling to do anything other than giving Amtrak just enough to stumble along. It is suspected that the current Amtrak board is going to continue downgrading the service levels so that at some later date they can then claim that "nobody rides the trains." Dissappointing.

 

[conductorchris]

I was actually rather pleased at this report.

In most ways this reqest is a continuation of Gunn's manner. They are essentially asking for full funding of what they are doing now.

Yes, indeed, fundemental changes do need to be made, but it is too early to go trotting those out. Simply asking for more money is not a feasible first step. The case has to be made and that means some meaningful planning has to be completed.

For next year . . .

1. ask for an increase in incentive payments to freight railroads (but this first requires an analysis of the cost of late trains and the engagement of freight railroads to add their lobbying clout). The goal here is to transform Amtrak's on-time performance.

2. Ask for much more money for rebuilds and overhauls - also for the goal of reducing mechanical related delays.

3. Ask for tax credit provisions to enable private funding for new cars.