Amtrak Says It Is Finally Making A Profit, But More Bad News Is Coming

Discussion in 'Amtrak Rail Discussion' started by Rover, Nov 18, 2019.

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  1. Nov 18, 2019 #1

    Rover

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    Last edited by a moderator: Nov 18, 2019
  2. Nov 18, 2019 #2

    tricia

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    Well, it's from the Cato Institute. So the article basically addresses Amtrak's misleading spin with Cato's own misleading spin.
     
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  3. Nov 18, 2019 #3

    LookingGlassTie

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    Does all of the infrastructure that needs $33 billion in maintenance belong to Amtrak? Or does some of it belong to the freight railroads? How much sway does Amtrak have over the FR's and how much pressure can be placed on the latter to make the necessary repairs and improvments?

    Maybe some of that profit could be used to maintain at least some of the infrastructure, but who knows......
     
  4. Nov 18, 2019 #4

    LookingGlassTie

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    Well I happen to like Cato, but that's a discussion for another day......... :p
     
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  5. Nov 18, 2019 #5

    jiml

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    I'll defer to others' expertise, but I like to think of myself as a bit of an Amtrak historian having followed the company since its inception. Without delving into the larger conclusions in the article, this statement stands out as not making much sense. I would think that the Heritage fleet cars by the time they were retired would certainly have been the oldest "in Amtrak's history" - by a mile. The average would actually have dropped since their retirement, so even with some Amfleet getting very long-in-the-tooth there's no way the current number could be setting any records.
     
  6. Nov 18, 2019 #6

    railiner

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    In 1971, the year of Amtrak's birth, i believe all the cars in the fleet were at least of post-war vintage, making them at most, 25 years old, with a younger average age.
    In 2019, there are some cars still running built in 1969 (not even counting recently retired Heritage cars), so the oldest is 50 years old, and the average I'm not sure of....
     
  7. Nov 18, 2019 #7

    me_little_me

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    Amtrak named the Superliner 2 cars after the states as each f the states came into the Union. :)
     
  8. Nov 18, 2019 #8

    MikefromCrete

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    Cato Intitute is going find some problem with Amtrak, no matter what the news.
     
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  9. Nov 18, 2019 #9

    RSG

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    The unstated comparison is between the passenger rail cars of Amtrak and commercial aircraft. That's a false premise on the surface, as one can't compare the two---at all. Rail cars are routinely rebuilt and consistently have new axles and wheels replaced. It's true that only so much can be done with aging equipment, as well as that older equipment is more expensive to maintain and operate, but there is still a lot of life in older rail cars, unlike with commercial aircraft.

    Even then, there are plenty of commercially-built aircraft which are still flying and still in great shape which are older than half a century. I see this overall line of thought as a commercial extension of consumerism, where "shiny and new" is automatically better and something every customer should demand. More important is the fact that what is in use and operating actually works. That is the real equipment issue that Amtrak has consistently had issues with.
     
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  10. Nov 18, 2019 #10

    RSG

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    There's nothing wrong with the Cato Institute, but...

    This is true. They've had a [vulgar reference self-censored] for Amtrak for years, and were the author of a report often cited by critics which claims to disprove the economic benefits of rail travel in general and the beneficial aspect of Amtrak in particular.
     
  11. Nov 18, 2019 #11

    RSG

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    The article in general, as well as the supporting evidence, is full of misconceptions and false statements. For example, I could find nothing in the release or the supporting graphic which states that "operating revenues covered 99.1 percent of its operating costs". It may (or may not) be published elsewhere, but it's not in the release that the author is picking apart.

    The claim that Amtrak is guilty of "securities fraud" is like claiming a bank robber is guilty of an 'unauthorized withdrawal'. Both classes of stock which comprise the National Passenger Railroad Corporation are not for sale to the public nor any other outside investor and do not trade which would place the company at a fluctuating value, so there is no legal definition of fraud. The NPRC may be guilty of failing to take depreciation into account, but even if it were, that is of no concern to those who hold the stock, even if one of the entities which does so is the US Treasury.

    That said, someone should slap Tony Coscia upside the head for making the statement "[...] put us on track to breakeven in 2020". First of all, you never make the implication that past performance is indicative of future results, particularly where a federally funded agency is involved. Secondly, "breakeven" implies--as the article author extrapolates--that Amtrak can and will be "profitable". As discussed many times over the years here, 'profit' is really something that should be excised from the conversation regarding Amtrak, for a number of reasons.
     
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  12. Nov 18, 2019 #12

    lordsigma

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    The Cato Institute makes some points on some topics that I agree with, but as far as Amtrak (and all rail in general) they are opposed to all passenger rail and transit (including commuter rail, the northeast corridor, subways, etc) they have an extremely conservative privatize everything no subsidies view and are essentially against all forms of transit and believe that government should only invest in roads and air travel and eliminate all non bus public transit. Much of this is motivated by the fact that the oil and natural gas industry are major donors and have heavy influence on the group (and probably also to clear out all the railroads so that the freight carriers have free reign). This author O’Tooles entire MO is get rid of all passenger rail.
     
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  13. Nov 19, 2019 #13

    Rover

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    I also like Kato.
    [​IMG]
     
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  14. Nov 19, 2019 #14

    Anderson

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    (1) I believe that the $33bn is primarily a reference to a mix of NEC stuff (most of which is bridges and tunnels which either are approaching the end of their normal service life or which have arguably long since passed that point...the Baltimore tunnels are coming up hard on 150 years old, for example). However, there are doubtless a few other things thrown in with some older stations.

    (2) I believe that Amtrak did keep around a few cars of the 1939-42 vintage at the start, even if they cycled them out in that first decade or so. I remember specifically reading somewhere that there was a car from 1939 in the mix, and there were a few very nice batches of equipment ordered in the late 1930s that would have been more worth keeping than some of the "newer" (read: 1950s) stuff that simply wasn't kept up well. There were a few "bad idea" cars (the cor-ten steel ones come to mind) that were newer as well.

    (3) Railcars do tend to have a longer useful life, if kept up, than an equivalent aircraft. There are a few reasons for this, but the big one is probably that with airplanes you've got the engine as part of the aircraft and swapping out an engine option isn't exactly a simple task. With a train, you generally just swap out the locomotive and call it a day. Fixed sets are a somewhat different story (and I've long held that they're generally a dumb idea for this and other reasons), though it is at least conceivable to change out locos on a long-term basis. However, that aside there are safety issues that start to build up alongside parts issues (and to some extent, with conventional railcars as long as the frame is good and the bogies/wheelsets are still usable and properly swapped out you're still good)...but even there, you can speed-limit railcars to mitigate a safety issue while you can't do an equivalent on planes.

    With that being said, the useful life of a railcar which is well-built and well-kept (but well-used) is probably about 50 years in regular service if you're pushing it. Getting up to 60-70 years...you can do it, but the risks of problems appearing start to rise. My understanding, in this context, is that the Amfleets are probably good for another 7-10 years (give or take) but there's a mounting chance that fatigue issues will pile up the longer you go, risking a major fleet meltdown.
     
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  15. Nov 19, 2019 #15

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    Securities fraud is irrelevant in this context, but the writer's argument isn't even correct. Every public company issues a positive press release along with its financial statements. The writer hasn't alleged anything fraudulent but by the conclusion, Amtrak is guilty of fraud anyway.
     
  16. Nov 19, 2019 #16

    Anderson

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    I mean, Amtrak can probably claim that it is profitable under EBITDA, which is used in the financial world as an alternative measure of financial health. That's jokingly known as "Earnings Before I Tricked the Dumb Auditor" because depreciation, in particular, can be subject to so much fudging around that it can render earnings data questionable. For example, in Amtrak's case, what do you use as a depreciation timeline for a car? The Acelas are set to last about 20 years, the Amfleet Is have been in use for over 40 years, and the last Heritage cars lasted close to 70*. Ditto rights-of-way and major infrastructure stuff (especially where Amtrak has a reasonable expectation of the government paying for part or all of the replacement items).


    *I'd argue for a 30-40 year timeframe for cars and a 25-year timeframe for fixed/semi-fixed trainsets.
     
  17. Nov 20, 2019 #17

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    The Cato Institute's opinion on transportation "Amtrak is bad because it's public and steals your freedom (read money)....Megabus is good because it's private". I get that a broken clock is right twice a day, but you'd need a dump truck worth of salt to take anything the Cato Institute says seriously.
     
  18. Nov 20, 2019 #18

    RSG

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    The major issue with commercial aircraft is the metal fatigue caused by the constant pressure changes (both inside and outside the aircraft). There are only so many trips that an aircraft can take before its usefulness is exhausted. That, of course, is not a concern with rail cars, but as previously mentioned, they have problems all their own.
     
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  19. Nov 20, 2019 #19

    Anderson

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    Well, and that isn't even what I was thinking of. I was thinking of the fact that the engines put on a plane in, say, 1975 will be less efficient than newer engines...so even if the metal fatigue wasn't an issue, newer planes' improved operating efficiency would be a big factor.
     
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  20. Nov 20, 2019 #20

    jis

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  21. Nov 20, 2019 #21

    Anderson

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    https://www.amtrak.com/content/dam/...Monthly-Performance-Report-September-2019.pdf

    I'll go into more details elsewhere, but I post the link to the September MPR (year-end for FY19) because it shows that on the passenger side, Amtrak made a profit (that is to say, total attributed costs were less than total attributed revenues). Now, there was a loss on the infrastructure side of things...but RASM exceeded CASM for the full year.
     
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  22. Nov 20, 2019 #22

    jis

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    I think it is unusual for a well funded passenger operation to retain equipment more than 40 years old if they can help it, without doing major rebuild from ground up, at which point one gets into a potential discussion of "if the only thing left in the rebuilt car is the ashtray from the pre-rebuild, is it still the old car?'.

    Usually it is advancement of technology that finally does in old cars too. For example India is in the process of mass replacing some 15,000 passenger cars with new generation cars because the newer cars are lighter and much safer than the old cars. Of course, a system that is inadequately funded would not be able to achieve such.

    As for locos, again the issue is how adequately is the system funded. There is the possibility of endlessly rebuilding and tweaking old locomotives to keep them going beyond any reasonable lifespan. Adequately funded system replace locomotive much more rapidly than inadequately funded systems do. Of course change in technology hastens replacement at those flex points dramatically, like again at Indian Railways, after 2025-26 diesel locomotives will become relatively rare except on obscure branch lines, if the full electrification of all major routes goal is achieved. There is a major program developing for rebuilding diesel engines as electric engines since the electric drive and trucks and motors are literally exactly the same as in the electric locomotives.
     
    Last edited: Nov 20, 2019
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  23. Nov 20, 2019 #23

    seat38a

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    This is probably what is getting Amtrak back on the rail. It is always good to have another point of view no matter how sacrilegious the idea might be. 50 years over due.

    So subsidies will never go away it sounds like. The billions that congress gives will be used for big ticket items like equipment instead of for operating the trains. Also, with recent credit rating increase after Amtrak's release of their best financial performance, they could probably borrow more money cheaply on top of what congress gives them. So essentially fixing those rattles rather than subsidizing the Amburgers. And for those who complained on the ADA post, looks like this is where the money will come from to speed up those improvements.

    Until there's some teeth, the bark will be useless.
     
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  24. Nov 20, 2019 #24

    chrsjrcj

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    The report probably deserves its own thread, but a few things I found interesting:
    • Silver Star expenses down $5 million. Obviously there hasn't been any major changes to the on-board services to this train, so I imagine it might have something to do with crew utilization? Ridership is up 22k, but revenue is down $200k.
    • Capitol Limited revenue is down $1.1 million, but expenses are down $4.4 million. Ridership down 9.4k.
    • Palmetto revenue is down $2.7 million, and ridership dropped by 42.6k riders.
    • Auto Train revenue is up $6 million and expenses are down $2.8 million. The losses on this route (as shown by Amtrak) decreased over 50% (from $15.6 million in FY 18 to $6.7 million in FY 19).
    • The eCSI customer satisfaction scores for the entire Amtrak system increased by 10 points, despite OTP dropping. The Crescent has a score of 79, which is the lowest. Last year it had a score of 57.8. I wonder if the way this score is calculated has changed?
     
  25. Nov 20, 2019 #25

    jis

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    Palmetto has been hit hard by plain old non-operation due to CSX daytime track work I think.
     

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