Richard Anderson replacing Wick Moorman as Amtrak CEO

[neroden]

A stretched model has negligible increase in cost hence why the airlines are scrambling to buy the stretched model vs the base model.

All right! so he'll understand the "longer train" thing. Good. If he understands "more trains per day" having economies of scale, then he gets the business and we'll be OK.

 

[neroden]

The key thing which I hope Anderson can get through his head is the economies of scale in railroading. Many of these are NOT present in the airline industry and it can lead to bad decisions.

(1) Longer trains. Huge economies of scale. No equivalent in airlines.

(2) More trains per day on the same route. Huge economies of scale. No equivalent in airlines.

If he doesn't understand these two points, he will completely and utterly screw it up. If Moorman manages to make these two economies of scale clear to Anderson he'll do fine.

1.) How about larger air craft? Does it have to do exponential fuel consumption which leads to less economy of scale in airline industry?

2.) I assume it means on the same tracks? Track usage vs maintenance cost?

Yeah, #2, that's what I meant. Fixed costs of keeping the track & signals up to passenger standards.

 

[bretton88]

A stretched model has negligible increase in cost hence why the airlines are scrambling to buy the stretched model vs the base model.

All right! so he'll understand the "longer train" thing. Good. If he understands "more trains per day" having economies of scale, then he gets the business and we'll be OK.

To note Moorman will still be on until the end of the year and be a consultant after that. He will probably emphasize some of the things like the economy of scale to Anderson. The reason I like this hire is because he comes from a transportation background. Amtrak is a transportation company. His background shows that he cares about customer service and operations, both of which could use improvement at Amtrak (especially customer service). With a 3 year contract, I am sure he is empowered to make the changes he feels necessary.

 

[railiner]

I can't say I'm fond of an airline exec trying to run a railroad. Suffice to say, I am NOT optimistic.

In the "every thing old, is new again" department........ :unsure:

http://www.nytimes.com/1971/05/01/archives/nominee-for-top-amtrak-post-roger-lewis.html

 

[Trainmans daughter]

My first thought was the same as GML. But then I saw the photo and realized this is not the same Richard Anderson. Too bad.....MacGyver would be great for Amtrak,and he's adorable, too.

 

[neroden]

Well, in most ways Roger Lewis is considered to have done a pretty good job at Amtrak. He made one absolutely catastrophic error -- asked by a member of Congress in a hearing, "what would you do with a billion dollars if we gave it to Amtrak", he said he wouldn't know what to do with it.

I am pretty sure Anderson won't make THAT mistake!

 

[dlagrua]

A point to consider is that Richard Anderson was the CEO of a for profit corporation. Amtrak is a totally different animal. When he discovers that Amtrak salaries account for about 75% of total revenue, jobs may be cut or lost.

 

[AmtrakBlue]

A point to consider is that Richard Anderson was the CEO of a for profit corporation. Amtrak is a totally different animal. When he discovers that Amtrak salaries account for about 75% of total revenue, jobs may be cut or lost.

Citation

 

[MikefromCrete]

Boy, did you fall out of the bed on the wrong side today? Or is that just your normal state?

My normal state is to wonder how publicly humble-bragging that your spouse casually dominates your decision making became a thing.

Guess you've never been married, Devil.

 

[Devil's Advocate]

Boy, did you fall out of the bed on the wrong side today? Or is that just your normal state?

My normal state is to wonder how publicly humble-bragging that your spouse casually dominates your decision making became a thing.

Guess you've never been married, Devil.

Nope. Been asked but politely declined. I have no problem with longterm romantic cohabitation but I simply don't see the point in adding religious sanctioning and government bonding to a private relationship. Some people think that means I'm scared of committing my life to a potential nutcase, but from my perspective people who think like that are probably hiding an overactive fear of dying alone.

 

[neroden]

Perhaps unsurprising given my financial leanings, but I always viewed marriage as a legal and financial arrangement. For some it is advantageous; for others it is not. I've been in a committed relationship for, hmm, 19 years now, but marriage would have cost us over $15,000 per year, because it would kick her off of her health insurance! If it ever becomes profitable, we'll do it.

 

[Mystic River Dragon]

Actually, the reason Mrs. Moorman was so annoyed was that she had asked her husband to promise to never take a full-time job again after retirement, and then he got persuaded/sucked into the Amtrak mess. And it turned out she was right--look at the horrible stuff he's had to deal with.

Now, with all due respect, can we please get back to how we can save Amtrak under a CEO from an airline and make him do the right thing (better customer service, keeping long-distance, etc.) and not do the wrong thing (killing Amtrak completely)? I know we all (myself among the worst culprits) tend to get side-tracked (and yes, I think I may have even started it without realizing what I was starting), but this subject is too important for us to lose our focus. Thanks, everyone....

 

[neroden]

If it's possible to make it clear to Anderson that:

-- running a second train on the Water Level Route would improve Amtrak's bottom line thanks to higher ridership and economies of scale

-- adding sleepers to the eastern trains would improve Amtrak's bottom line thanks to higher ridership and economies of scale

-- getting their own tracks from Porter to Chicago would massively improve Amtrak's *top* line by increasing on time performance

.... I think he can probably understand everything else, given his customer service history. Things like the above points are pecuilar to railroads, however, and don't apply to airlines.

 

[jis]

A point to consider is that Richard Anderson was the CEO of a for profit corporation. Amtrak is a totally different animal. When he discovers that Amtrak salaries account for about 75% of total revenue, jobs may be cut or lost.

Citation

For FY16 AFAICT Total Revenue was $3.2406 million and Salaries, Wages and Benefits was $2.0876 million, making it 64.4% of Total Revenue, not 75%. Numbers used are the YTD numbers from the Summary Financial Results in the September 2016 Monthly Performance Report, Appendix 1 (Audited).

Jobs may be cut or lost or salaries and benefits may get revised downwards. Such stuff happens in the industry all the time. We went through a period of about ten years of flat or occasional declining salaries and several significant benefits reductions, and very significant work force readjustments (layoffs), a period that ended sometime around 2013-14. And darn it, through almost all of that period we were a profitable company, except for one quarter when a cost of a merger was written off.

And until someone manages to update 49 CFR 700.2 (requires an act of the Congress) to take out the phrase "for profit corporation", Amtrak by its charter continues to be a "for profit corporation". That it does not or cannot make a profit for various possibly legitimate reasons is a matter that is not included in its charter at present. Granted that Mr. Anderson will have a bit of a challenge, but then he has been there and done that in the airline industry. So that experience should be nothing new. Unfortunately the straitjacket environment in which Amtrak operates does not give him as many flexible options as he had in the airline industry to address the issue as swiftly as he could at Delta.

I don't think Anderson will have any problem understanding the points that neroden raises, specially with Moorman spending 6+ months explaining those and other railroad specific issue to him.

 

[Philly Amtrak Fan]

I think Anderson understands economies of scale and Woody's motto "best cure for Amtrak is more Amtrak". as does Moorman and as did most of their predecessors too. The problem is Congress doesn't know this and doesn't give Amtrak the money to expand service to improve the bottom line (or they just don't care if Amtrak succeeds). In reality the best Amtrak CEO would be the one who can get the most $$$ out of Congress). Hopefully a little extra now and Amtrak won't need as much 5-10 years from now.

 

[frequentflyer]

The post stating having Amtrak hub in ATL is funny, I was just going through there yesterday.

 

[Rover]

This opinion was posted on another board, but I though it should be viewed.

aemoreira1981:
I suspect that the real reason for this appointment might be his stance with unions. Under Richard Anderson at Northwest and Delta, the non-pilot and flight dispatcher employees were all successfully de-unionized following the merger of the highly-unionized Northwest with the mostly non-union Delta (Delta needed Northwest's Asia network, but for Delta's culture to predominate). Knowing that federal worker strikes are illegal under Taft-Hartley, I suspect that Anderson has a mandate to be a hard-liner with the unions.

 

[Hotblack Desiato]

If it's possible to make it clear to Anderson that:

-- running a second train on the Water Level Route would improve Amtrak's bottom line thanks to higher ridership and economies of scale

-- adding sleepers to the eastern trains would improve Amtrak's bottom line thanks to higher ridership and economies of scale

-- getting their own tracks from Porter to Chicago would massively improve Amtrak's *top* line by increasing on time performance

.... I think he can probably understand everything else, given his customer service history. Things like the above points are pecuilar to railroads, however, and don't apply to airlines.

A point to consider is that Richard Anderson was the CEO of a for profit corporation. Amtrak is a totally different animal. When he discovers that Amtrak salaries account for about 75% of total revenue, jobs may be cut or lost.

Jesus, do you folks really think Anderson is that much of an idiot, that he doesn't realize Amtrak is a railroad? That he hasn't taken a good look at Amtrak's finances and corporate structure before accepting the job?

It's not like he's some teenager that just applied for a job at McDonald's.

I'd be willing to bet that he knows more about the railroad industry than certain posters in this thread.

 

[JoeBas]

I'd be willing to bet that he knows more about the railroad industry than certain posters in this thread.

YOU TAKE THAT BACK!!! NO ONE knows more about railroads than message board foamers!

 

[A Voice]

I'd be willing to bet that he knows more about the railroad industry than certain posters in this thread.

That's not really a very high bar for him to have to reach, is it? Well said, regardless (but did you have to take God's name in vain to do it?). .

 

[MARC Rider]

This opinion was posted on another board, but I though it should be viewed.

aemoreira1981:

I suspect that the real reason for this appointment might be his stance with unions. Under Richard Anderson at Northwest and Delta, the non-pilot and flight dispatcher employees were all successfully de-unionized following the merger of the highly-unionized Northwest with the mostly non-union Delta (Delta needed Northwest's Asia network, but for Delta's culture to predominate). Knowing that federal worker strikes are illegal under Taft-Hartley, I suspect that Anderson has a mandate to be a hard-liner with the unions.

I don't think Amtrak employees are Federal employees. Thus, if they want to strike, they can.

However, I'd like to know how Mr. Anderson managed to take a hard line with the workers and at the same time improve customer service at Delta. My last experience with this sort of thing was as a reluctant passenger on Frank Lorenzo's Continental Airlines in the 1980s. Sure, they de-unionized the lot, but the screwed-over workers took it out on us passengers. The only reason I flew Continental was because they had the government contract for the city pair that I was using at the time. When other airlines got the contract, I was a very happy traveler.

You might be right about why Mr. Anderson was chosen, but I don't think unions are really the problem that everybody thinks they are.

 

[Devil's Advocate]

I'm inclined to agree with those who are theorizing that hardline anti-union moves and benefit reductions is likely to be one of the primary goals of the new CEO.

 

[jis]

I'd be willing to bet that he knows more about the railroad industry than certain posters in this thread.

YOU TAKE THAT BACK!!! NO ONE knows more about railroads than message board foamers!

ROTFL! So true! So true! The sanctimonious they are the more they know LOL!

 

[Steve4031]

One thing Anderson will have to address is what is or is not happening to equipment in chicago, New York, Washington and Miami. We all know that trains are sent out on the road with defective equipment. Is this a union issue with lazy workers, poor management of resources, or not enough equipment? Or a combination.

 

[WoodyinNYC]

The post stating having Amtrak hub in ATL is funny.

If you're going to Hell, you have to change planes in Atlanta.

Srsly, Anderson must know many important people in ATL who will take his call. He has to tell them how urgently ATL needs a new and much larger station, with an adequate waiting room and facilities, including ample parking for autos and especially buses (and a link to mass transit would be good, too). ATL needs a separate station track to get stopped Amtrak trains out of the way of the NS main line traffic; a way to turn the train around; and a way to split off for service to Macon-points south, to Chattanooga-points north, and to points west-Dallas-Ft Worth.

If Anderson can get spending started on the Amtrak Atlanta complex by the times he retires, he will join the pantheon.

I'm inclined to agree with those who are theorizing that hardline anti-union moves and benefit reductions is likely to be one of the primary goals of the new CEO.

Obviously, under the Obama/Biden/LaHood/Szabo/Boardman administration, nobody was looking to pick a fight with the unions. And as far as I could see, the unions in turn were never unreasonable. So Amtrak enjoyed 8 years of labor peace, which is worth something.

Again obviously, some Congresscritters now are looking to fight any and all unions out of ideological zealotry, so we could see trouble where there has been none.

The overall situation, however, does not exactly parallel Delta's history. The Northwest merger came at a time when low-cost start-up airlines were popping up everywhere, with two big advantages: lower payroll costs (for crews with no seniority); and younger, cuter, sexier stewardesses (with no seniority and therefore no accumulated pounds or wrinkles). Amtrak today doesn't face those marketplace challenges that Delta and the other heritage airlines did.

Meanwhile, the Stimulus improvements and other expansion will kick in by October, the beginning of FY 2018. So two more round trips of the Cascades Seattle-Portland, another run of the Piedmonts and then still an another in a year or so, (or is it going to be two right off?). And Virginia plans to crank up another train to Norfolk soon, and still another one soonish. It also will introduce an extension of D.C.-Lynchburg service to Roanoke. And not to forget that last year California added a 7th San Joaquin run and the umpteenth Pacific Surfliner frequency L.A.-S.D. Each of these routes will benefit from economies of scale, and see revenues outpace their employee costs, thus allowing Amtrak to show progress by some critical metrics.