“Amtrak Joe” may run the country, but is it even enough to turnaround the company?
Background:
Since it’s inception in 1971 Amtrak has never had a profitable year. Amtrak formed after the U.S. decided to buy failing private railroad companies providing nationwide passenger service. Amtrak is broken into three business models. The first is the Northeast Corridor or NEC. This line runs from Washington D.C. to Boston and includes high speed Acela service. The second is state sponsored routes, Amtrak shares the costs with state governments, think Amtrak Cascades. Lastly, the company provides long-distance service, like the Empire Builder from Seattle to Chicago.
The Acela service is Amtrak’s most profitable line, earning the company $80 per passenger. State sponsored lines combined do not bring in a profit, however because the state carries some of the financial burden, and because these routes connect urban areas, the potential for earnings is there. It is not recommended Amtrak cut state sponsored lines. Amtrak’s long distance routes are killing the company. Every long distance route is operating at a loss. Bloomberg reports ““ In particular, long-distance trips account for 15% of Amtrak’s total ridership and 80% of its financial losses.” Analysis from the transportation themed YouTube channel Wendover Productions shows Amtrak’s Sunset Limited line, running from New Orleans, Louisiana to Los Angeles costs the company $456/per passenger.
Expenses/Income. (FY21)
According to Amtrak financial statements, the company has $21,475,632,000 in total assets…
Total revenue: $2,081,804,000
Advertising expenses: $56,178,000
Total expenses: $4,065,801,000
Operating loss: $2,007,073,000
Estimated retirement/pension benefit payouts for FY22: $74,143,000
Retirement obligation 10/1/21: $529,553,000
Retirement plan assets: $469,573,000
The retirement numbers confused me, so I added charts from Amtrak’s financial statement below.
Trends/ Noteworthy
November’s infrastructure package provided Amtrak with $66 billion. The company plans to use the money to add more lines and continue subsidizing long distance routes. However, as Bloomberg points out Amtrak has a long list of maintenance repairs. The Northeast corridor, Amtrak’s most profitable region, has a maintenance backlog exceeding $38 billion. I think Amtrak should focus on improving profitable corridors before expanding long distance routes. According to NBC News, Amtrak is planning to spend $22 billion form the infrastructure package on improvements.
Railway Age reports, due to an Omicron surge, Amtrak will reduce service across all lines for a ten week period ending March 27. Service disruptions on the Northeast Corridor will certainly hurt Amtrak’s bottom line. Disruptions on Amtrak’s long distance routes will save the company money, counteracting lost revenue from Northeast disruptions.
Sources:
Amtrak financial reports:
Bloomberg:
NBC News:
Railway Age:
Wendover Productions: