Amtrak received a federal subsidy of nearly $1.4 billion in fiscal 2012. It would be nice if positive trends continue and Amtrak can reduce the amount of the federal handout that it needs. But, no one should be under any illusions that Amtrak is now magically making a profit.
As passengers take to Amtrak trains this Memorial Day weekend, they may be comforted to know that the rail line’s financial picture is improving a bit, but some news media reporting about the service tend to be misleading.
For example, a recent Associated Press story about Amtrak’s order of 70 new locomotives stated: “Amtrak said it will be able to pay back a $466 million federal loan for the locomotives over 25 years using net profits from the Northeast Corridor line, where ridership hit a record high last year for the ninth time in 10 years.”
Well, there are “profits” and then there are profits, and an Amtrak spokesperson says the Associated Press story was inaccurate.
Skift asked Amtrak for some more detail about the financial picture of Amtrak’s Northeast Corridor services to consider whether they are indeed profitable.
The answer? Both Amtrak’s Acela Express Service and its Northeast Corridor Regional Service “would post losses when capital costs [for infrastructure, track and tunnels] are included,” an Amtrak spokesperson says.
The Amtrak spokesperson provided figures for fiscal year 2011, showing Acela Express Service “recovered 168 percent of its operating costs through revenues [ticket and food and beverage sales], or about $204.9 million above expenses.”
Northeast Corridor Regional Service “recovered 110 percent of its operating costs through revenues, or about $44.6 million above expenses,” the Amtrak spokesperson says.
So, although the fiscal picture may be improving for Amtrak in its important Northeast Corridor service, it is still a money-losing operation when you consider all of the real-world costs, and any rosy reporting about net profits is basically illusory.
Overall for Amtrak in fiscal year 2012, it posted a net loss of nearly $1.24 billion. That was a narrowing of its losses, as the rail line record a net loss of $1.34 billion in fiscal 2011.
On the positive side, In addition to narrowing its losses, Amtrak notched record ridership in fiscal 2012.
The new locomotives on order may help Amtrak operate a more efficient and cost-effective service, but the bottom line is that Amtrak won’t be running a profit-making rail service on the Northeast Corridor or nationwide anytime soon.
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Photo credit: Amtrak's high speed Acela at Washington's Union Station on February 8, 2011. Larry Downing / Reuters