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Amtrak's Gunn uses the "B" word
WASHINGTON, D.C. -- Amtrak's president said Thursday (May 12) that the passenger carrier's financial condition, worsened by disruption of high-speed Acela service, is being further eroded by uncertainty over federal subsidies needed to survive, according to this Reuters report.
David Gunn told a Senate hearing bankruptcy is possible within months unless the Bush administration and Congress resolve differences soon over national rail service and deliver enough money to continue operations.
"We're facing a cash crunch at the end of September. To me that's imminent," Gunn said in an interview about the potential for bankruptcy at the nation's only multi-city passenger rail network.
Preparing for potential bankruptcy would begin sooner.
"Amtrak is quite literally coming to the end of its rope," said Kenneth Mead, the Transportation Department inspector general, told the appropriations subcommittee on transportation.
Amtrak could lose up to $1 million per week without its premium Acela service, which has been idled for nearly a month because of brake disc cracks. The railroad estimates it will have only $32 million in cash as of Sept. 30, the end of the fiscal year. That figure is enough money to operate for weeks, officials said. Amtrak had 25 million riders last year.
Gunn said operating problems and uncertainty about subsidies are having financial consequences. Insurance is more expensive, Amtrak's credit rating was downgraded, and several suppliers may require it to put cash in escrow to ensure payment. Gunn would not identify the suppliers, but said they were large businesses.
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WASHINGTON, D.C. -- Amtrak's president said Thursday (May 12) that the passenger carrier's financial condition, worsened by disruption of high-speed Acela service, is being further eroded by uncertainty over federal subsidies needed to survive, according to this Reuters report.
David Gunn told a Senate hearing bankruptcy is possible within months unless the Bush administration and Congress resolve differences soon over national rail service and deliver enough money to continue operations.
"We're facing a cash crunch at the end of September. To me that's imminent," Gunn said in an interview about the potential for bankruptcy at the nation's only multi-city passenger rail network.
Preparing for potential bankruptcy would begin sooner.
"Amtrak is quite literally coming to the end of its rope," said Kenneth Mead, the Transportation Department inspector general, told the appropriations subcommittee on transportation.
Amtrak could lose up to $1 million per week without its premium Acela service, which has been idled for nearly a month because of brake disc cracks. The railroad estimates it will have only $32 million in cash as of Sept. 30, the end of the fiscal year. That figure is enough money to operate for weeks, officials said. Amtrak had 25 million riders last year.
Gunn said operating problems and uncertainty about subsidies are having financial consequences. Insurance is more expensive, Amtrak's credit rating was downgraded, and several suppliers may require it to put cash in escrow to ensure payment. Gunn would not identify the suppliers, but said they were large businesses.
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