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keelhauled

Amtrak Cuts Operating Losses to Lowest Level in Decades

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What it says on the tin, via AP/NYTimes.  Amtrak doesn't seem to have issued a press release yet.  $168 million operating loss (lowest since 1973) on record high $3.4 billion revenue; hopes to eliminate operating loss entirely by 2021; ridership flat at 31.7 million, blamed on service disruptions such as NYP work; board authorized acquisition of new diesel locomotives.

Edited by keelhauled

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Cost cutting is great the first 18 months until people realize the product sucks. We heard the same thing under Warrington. I’m sure those projections are based off of running NEC and state corridors only in 2021. Their math is flawed. 

 

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Notice the words 'operating loss' with the Amtrak statement.  One has to wonder what kind of 'voodoo accounting' Amtrak is using to allocate station expense, management expense, etc, to the 'non-operating' side of the ledger. 

Unfortunately, Anderson doesn't have NY Penn Station to sell to offset 'operating losses'.  But at least closing the Riverside CA reservation center  will add something to Amtraks' coffers.

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Not one word about LDTs except the ridership is down comments.  Many bullet points of other highlights though. Their disdain for the national network could not be more obvious. 

Edited by Amtrakfflyer

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From the Press Release:

• Operating Earnings

[1]: ($168.0 million) – best Amtrak operating performance to date, improved 13.3 percent over FY 2017 total of $193.7 million

Volks, that's a LOSS; yes there is a bracket around the $168M, but the absence of loss in the caption is sure going to baffle some readers.

I'd sure like more disclosure as to what "adjusted earnings" means.  Maybe once the Audited Financial Statements are released, there will be greater disclosure within the Notes.

Edited by GBNorman
Perfect the quoted material

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15 minutes ago, GBNorman said:

From the Press Release:

 

 

Volks, that's a LOSS; yes there is a bracket around the $168M, but the absence of loss in the caption is sure going to baffle some readers.

I'd sure like more disclosure as to what "adjusted earnings" means.  Maybe once the Audited Financial Statements are released, there will be greater disclosure within the Notes.

From Amtrak (Page 3):

Quote

Going forward, Amtrak will report Adjusted Operating Earnings as the key financial measure to evaluate results, Net Income/(Loss) will continue to be reported for reference. Adjusted Operating earnings represents Amtrak’s cash funding needs and is a reasonable proxy for Federal Operating Support needed in line with the appropriation. Route level results will reflect the change to Adjusted Operating Earnings, in line with consolidated financials.

Adjusted Operating Earnings is defined as GAAP Net Loss excluding: (1) certain non-cash items (depreciation, income tax expense, non-cash portion of pension and other post retirement employment benefits, and state capital payment amortization); and (2) GAAP income statement items reported with capital or debt results or other grants (project related revenue/costs reported with capital results, expense related to Inspector General’s office, and interest expense, net).

 

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12 hours ago, PRR 60 said:
13 hours ago, GBNorman said:

From the Press Release:

 

 

Volks, that's a LOSS; yes there is a bracket around the $168M, but the absence of loss in the caption is sure going to baffle some readers.

I'd sure like more disclosure as to what "adjusted earnings" means.  Maybe once the Audited Financial Statements are released, there will be greater disclosure within the Notes.

From Amtrak (Page 3):

Quote

Going forward, Amtrak will report Adjusted Operating Earnings as the key financial measure to evaluate results, Net Income/(Loss) will continue to be reported for reference. Adjusted Operating earnings represents Amtrak’s cash funding needs and is a reasonable proxy for Federal Operating Support needed in line with the appropriation. Route level results will reflect the change to Adjusted Operating Earnings, in line with consolidated financials.

Adjusted Operating Earnings is defined as GAAP Net Loss excluding: (1) certain non-cash items (depreciation, income tax expense, non-cash portion of pension and other post retirement employment benefits, and state capital payment amortization); and (2) GAAP income statement items reported with capital or debt results or other grants (project related revenue/costs reported with capital results, expense related to Inspector General’s office, and interest expense, net).

Could someone please translate this into simple English that I can understand?

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51 minutes ago, cpotisch said:

Could someone please translate this into simple English that I can understand?

Accounting 101.  It may take at least a college semester to explain accounting principles, and I will not attempt to do so.  If I remember correctly, GAAP means Generally Accepted Accounting Principles.

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I'm not certain if this Adjusted Operating Earnings fully meets the definition of the accepted term of Earnings Before Interest, Taxes, Depreciation, Amortization (EBITDA), but it does represent an effort to state the Amtrak Loss on a Household Accounting (or what I often referred to with my clients as "Cookie Jar Accounting") basis.

What is of concern to me is with all the allegations of Amtrak "funny numbers" floating about, this latest practice, apparently disclosed within the Monthly Performance Rrport, is simply "grist for the mill" to those holding such views.

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Amtrak doesn't need to do anything to the LD trains to eliminate operating losses.  2021 coincides with the arival of the Acela IIs, which should result in a reasonable bump in revenue and "take out" most of the remaining losses right then and there.

FWIW, my suspicion has been that we'll very quickly see about a 25% bump in ridership on the Acelas (there will be more over time, but it'll take a bit for ridership patterns to shift on NEC South whereas on NEC North it'll probably happen very quickly) but about a 10% drop in per-passenger revenue (basically, more fares will probably get distributed to lower buckets)...so a net bump of 12.5% in revenue right off.  There's likely to be a modest drop in operating costs as well (the Acelas are quite heavy and quite "unique").

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But why must "more in the cookie jar than is taken out" from the NEC and the Locally supported services be used to support the loser LD's?

What's left in the cookie jar should be used to support infrastructure within the Corridors that pull their weight.

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But why must "more in the cookie jar than is taken out" from the NEC and the Locally supported services be used to support the loser LD's?
What's left in the cookie jar should be used to support infrastructure within the Corridors that pull their weight.
Then we may as well kiss all of Amtrak good bye now. Lets be clear, Amtrak does not turn a profit, even in the northeast.

If I remember correctly, the way it has been explained is that it covers the overhead, which is purely costs of crewing the train and making it move. It does not cover maintenance costs.

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14 minutes ago, GBNorman said:

But why must "more in the cookie jar than is taken out" from the NEC and the Locally supported services be used to support the loser LD's?

What's left in the cookie jar should be used to support infrastructure within the Corridors that pull their weight.

Seriously? It's because the NEC and the national network are both part of Amtrak, so it doesn't make any difference in and of itself whether the money from one is put toward the other. Your logic is like saying that it doesn't make sense for a company to pay for an HR department because sales makes the money and HR doesn't make money. They are both part of one entity, and as with any company, revenue from certain part(s) has to be used to cover other parts.

Edited by cpotisch

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Why haven't the two immediate postings set forth the argument that "Amtrak needs the LD system to get funded"?

This has been the prevalent position taken for the past forty some years, but it would have appeared with the appointment of a CEO whose background was in an industry that provided transportation,  as distinct from experiences, that Congress was prepared to fund at record levels approaching $2B, the necessary infrastructure in markets where rail travel can be time competitive with other modes and there is sufficient demand to warrant public funds for such.

Last time I checked, those markets are referred to as Corridors.

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5 minutes ago, GBNorman said:

Why haven't the two immediate postings set forth the argument that "Amtrak needs the LD system to get funded"?

This has been the prevalent position taken for the past forty some years, but it would have appeared with the appointment of a CEO whose background was in an industry that provided transportation,  as distinct from experiences, that Congress was prepared to fund at record levels approaching $2B, the necessary infrastructure in markets where rail travel can be time competitive with other modes and there is sufficient demand to warrant public funds for such.

Last time I checked, those markets are referred to as Corridors.

It should also be noted however that the Senate gave a pretty clear disapproval to Amtrak's attempt to essentially discontinue the Southwest Chief. I would not be one to credit Anderson for the funding received. If we're going to as a country fund passenger rail then fund It for everyone. I should also add that several state corridors also lose money but I similarly do not call for their elimination. I will admit as an Amtrak rider and someone who has issues with air travel I am biased but so is everyone one way or another.

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Furthermore all transportation is subsidized one way or another. Amtrak is such small potatoes compared to the other needless stuff that taxpayers dump money into. Frankly if Long Island City, New York and Crystal City, Virginia, areas that do not need the jobs, can drop billions to bow at the court of Jeff Bezos and subsidize the largest and most powerful company in history I don't feel bad or guilty about Amtrak subsidies. There's a lot more places in the federal government and in state and local government that could and should be cut before you can convince me that Amtrak needs to be cut. Amtrak is just in easy target because people that don't ride it couldn't care less if it goes.

Edited by lordsigma

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There seems to be almost discord at Amtrak on what to do with the excess slug of money that they did get.  Don't get me wrong, some of that will go to equipment purchases and I understand Amtrak wanting to be careful about commitments in the event of a shutdown, but there's a real issue with Amtrak not "taking the hint".

This came up in an email thread over the weekend, but it says something that (for example) Amtrak did studies on the Pioneer, North Coast Hiawatha, and Sunset East/CONO Extension...but has in no case sought funding for those trains.  Now, I get that the Pioneer's study came back as rather a "turkey" (we can argue as to whether the study was sandbagged or not), but the NCH didn't (estimated ridership was several hundred thousand riders and cost recovery was pegged at something like 60-65%), but as far as I can tell Amtrak never asked for funding to pursue it further.  Yes, the project was about a $1bn affair (remember, you're probably looking at about $200m in equipment, plus trackwork on the relevant lines), but it would seem to reason that if Congress has asked you to study something and you come back with a decent answer, you'd then include in your next 2-3 budget requests "We need one-time funding of $X to restart this route and we want a carve-out of $Y in our annual appropriation to cover the expected added operating losses, and we cannot reasonably appropriate $X without a guarantee of $Y" as a starting position and then drop it if Congress doesn't bite.

Edit: The discord/confusion comes from the fact that it is painfully obvious that the whole "Contemporary Food Service" mess was conceived of at least in part in the expectation of a starvation budget, leaving management very confused as to what to do with the massive slug of funding it got.

Edited by Anderson

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 Anderson, I hear you about wanting more routes, a new North Coast Hiawatha would be a phenomenal addition to Amtraks routes. But wouldn't a second daily Empire Builder/California Zephyr or a daily Sunset Limited cost a lot less and bring nearly as much revenue? You would be using the same stations and tracks... Or would the demand probably not support them? Would making the NCH a split, with both the EB and the NCH leaving Chicago together and then have them split at Fargo? Then both of the trains continuing independently to Seattle on different routes? Or would the NCH rejoin the EB route at Sandpoint but carry on as a independent train so as to not mess up the schedule should one or the other be delayed?

I don't know what the estimates are for probable increases in ridership for additional trains on the LD network, so this is more of a question than a statement. If Amtrak can cut costs and maintain its ridership levels while getting more funding for equipment, it just seems like more trains on the current routes might be better first, before we bring in new routes. Though I have to admit, again, that the NCH and the Pioneer would be great to see again.

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@Ziv:
I hear you on the question of whether a second Builder or Zephyr would make more sense.  Practically speaking:
-Splitting the train, either at MSP or Fargo, raises the prospect of delays if one of the sections gets "stabbed" coming east.  The split at Spokane involves much less route length, so the room for major delays is at least limited.
-There's also the issue of train length.  A train splitting at MSP/Fargo would probably be running very long...sixteen or eighteen cars wouldn't be out of the question to accommodate a Seattle Builder, a Portland Builder, and a Seattle NCH.  At that point, major operational problems such as power constraints rear their head.

Now, an NCH would be partially redundant with the Builder (notably between Chicago and MSP, and possibly also between Spokane and Seattle), but this is not a bad thing.  If anything, the fact that in recent history (e.g. before the OTP meltdowns) CHI-MSP was able to put something like 50,000 riders/yr onto the Builder suggests a substantial untapped market.

As far as the "other" stations being served, there's definitely an added value to expanding the network in terms of serving more people (not to mention the political angle of serving the major cities in Montana), which should bring some folks who wouldn't otherwise be able to use Amtrak into the system.

Cost-wise, it might be cheaper to add a second Builder.  It also might not, depending on what BNSF would want to charge.

Ideally what you would see, with a serious/major proposal, would be the NCH being added alongside another pair of trains CHI-MSP, with a reasonable suite of schedules (three daytime, possibly one overnight on that corridor) and solid connections to/from the proposed NLX project (MSP-Duluth) for most of the trains (if not full-on through-running for one or both of those two "local" frequencies).

FWIW, if the Pioneer and Desert Wind were to be fully resurrected (something I don't see happening), I've felt that you'd want/need to seriously look at a second CHI-DEN train as well (probably in conjunction with the IAIS routing project) in no small part due to the probable required length of that train (again, an 8-9 car Zephyr adding another four pass-through cars for those two now probably needs an extra CCC at a minimum...so now you're up to about 14 Superliners, minimum).

Edit: And I let myself go astray...

The issue isn't that the train would be good or bad...it's that Congress did a pretty solid job of asking for it back and Amtrak did the bare minimum of going through the motions in terms of complying before presumably doing their best to bury the attempt.  That is the problem.  If nothing else, I would think that they would try to get the extra train and then make it very clear that it was potentially on the block if funding gets slashed.  Voila, you've got an added reason for a slate of senators not to mess with Amtrak's funding.

Edited by Anderson

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@Ziv:
I hear you on the question of whether a second Builder or Zephyr would make more sense.  Practically speaking:
-Splitting the train, either at MSP or Fargo, raises the prospect of delays if one of the sections gets "stabbed" coming east.  The split at Spokane involves much less route length, so the room for major delays is at least limited.
-There's also the issue of train length.  A train splitting at MSP/Fargo would probably be running very long...sixteen or eighteen cars wouldn't be out of the question to accommodate a Seattle Builder, a Portland Builder, and a Seattle NCH.  At that point, major operational problems such as power constraints rear their head.
Now, an NCH would be partially redundant with the Builder (notably between Chicago and MSP, and possibly also between Spokane and Seattle), but this is not a bad thing.  If anything, the fact that in recent history (e.g. before the OTP meltdowns) CHI-MSP was able to put something like 50,000 riders/yr onto the Builder suggests a substantial untapped market.
As far as the "other" stations being served, there's definitely an added value to expanding the network in terms of serving more people (not to mention the political angle of serving the major cities in Montana), which should bring some folks who wouldn't otherwise be able to use Amtrak into the system.
Cost-wise, it might be cheaper to add a second Builder.  It also might not, depending on what BNSF would want to charge.
Ideally what you would see, with a serious/major proposal, would be the NCH being added alongside another pair of trains CHI-MSP, with a reasonable suite of schedules (three daytime, possibly one overnight on that corridor) and solid connections to/from the proposed NLX project (MSP-Duluth) for most of the trains (if not full-on through-running for one or both of those two "local" frequencies).

FWIW, if the Pioneer and Desert Wind were to be fully resurrected (something I don't see happening), I've felt that you'd want/need to seriously look at a second CHI-DEN train as well (probably in conjunction with the IAIS routing project) in no small part due to the probable required length of that train (again, an 8-9 car Zephyr adding another four pass-through cars for those two now probably needs an extra CCC at a minimum...so now you're up to about 14 Superliners, minimum).

Edit: And I let myself go astray...

The issue isn't that the train would be good or bad...it's that Congress did a pretty solid job of asking for it back and Amtrak did the bare minimum of going through the motions in terms of complying before presumably doing their best to bury the attempt.  That is the problem.  If nothing else, I would think that they would try to get the extra train and then make it very clear that it was potentially on the block if funding gets slashed.  Voila, you've got an added reason for a slate of senators not to mess with Amtrak's funding.
I've always felt Idaho's focus on restoring the Pioneer was a bit misguided. Idaho's focus should be on corridor trains. Boise to SLC and Boise to Portland would both be very capable corridor trains and probably provide better service than an LD train that might be late, might have terrible calling times, or worse, might not be daily.

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13 hours ago, lordsigma said:

It should also be noted however that the Senate gave a pretty clear disapproval to Amtrak's attempt to essentially discontinue the Southwest Chief.

I will grant, that with the "beat the retreat" being sounded regarding whacking the SW Chief, Amtrak has acknowledged they misread how Congress still wants their pet LD trains.

In short, the record funding received during FY18, and appears "on track" for FY19 as well, still must be used in part to support the LD system.

But all this talk of restoring discontinued routes, if any materializes, would simply further dilute Amtrak's objective to provide modern and efficient rail passenger service in the markets that can support such.

Edited by GBNorman
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