Bailout has become a dirty word. But despite its enormous size, the United States needs efficient rail transportation. Amtrak isn't perfect, but it's the best we've got. It needs to stay in business.
U.S. passenger railroad service Amtrak told Congress in a letter made public Tuesday it needs a further $1.475 billion bailout or it will be forced to make sweeping service cuts and suspend some routes.
The company, which has been devastated by the coronavirus pandemic, in April received $1 billion in emergency funding. Amtrak said Tuesday it also plans reduce its operating costs by approximately $500 million, including by restructuring its workforce and controlling discretionary expenses.
Without the additional emergency funding, Amtrak said it would need to suspend some long-distance routes, and that others would operate on a thinned-down schedule. It would also need to greatly reduce its high-speed Acela service.
Amtrak said it now expects the massive travel demand fall-off due to the pandemic to result in a full year 50% reduction in system-wide revenue with current demand at around 5% of normal. It expects passenger demand will still fall from 32 million in 2019 to 16 million in the 2021 budget year.
The railroad said “increased telework and reduced discretionary income, will likely impact ridership, along with capacity limits that may be needed to achieve social distancing on our trains” as demand returns.
Even with new funding from Congress, it still plans to extend service cuts.
Chief Executive Bill Flynn said the railroad faces “daunting challenges” that “will require us to take action to protect our rail network, our critical capital assets, and the livelihoods of our employees.”
It projects revenue for the next fiscal year to fall by $1.6 billion and to run a $1.4 billion loss after it nearly broke even last year.
Amtrak is considering various ideas to cut employee expenses by $350 million.
The $1.475 billion request, for the fiscal year that begins Oct. 1, is in addition to an annual $2 billion in support it has been receiving from Congress in recent years.
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Photo credit: Amtrak needs almost $1.5 billion to stave off disaster, it told Congress. Pictured is one of its trains. 144831