Version VII – This Was The Week That Was

June 22, 2001

This week, in the annals of Amtrak:

1. The end of this week saw the presentation of the annual President’s Awards to a variety of recipients. The criteria for these awards is democratically wide open, allowing the awards to be available for a variety of reasons with great flexibility. Any employee can nominate anyone (even non-employees, as your humble correspondent was nominated a few years ago), and a diverse groups of employees then decides who the exact recipients will be, often after spirited debate. The awards are then presented in a special ceremony in Washington in June (this week). Even though named President’s Awards, the president of Amtrak has little to do with the process other than at the presentation.
2. Your humble correspondent STILL HAS NOT received his invitation to ride last Monday’s special promotional train down the FEC. Clearly, either a gross clerical error was made or the post office erroneously misplaced the invitation. What other explanation could be possible?
3. After much searching, Amtrak found a pawn shop large enough to hock Penn Station in New York successfully earlier this week. Amtrak is mum on the arrangements, and even who the lenders are, but the company did make an announcement that a $300 million loan had been placed, using parts of Penn Station as collateral. Employees should breathe easier now, knowing money for paychecks for the rest of the fiscal year is in place. Outside vendors, some of which have been waiting for up to – and some over six months – to be paid may also see some relief.
4. Evidence that ridership is still soft abounds, including the appearance again today of a half page newspaper ad in major markets. The 30% sale is still on, good until August 24th, the end of the summer travel season. Travel agents of A-A continue to report that sleeping car space is still easy to book for summer travel this year, normally months after sell outs have occurred in past years.
5. The big shocker of the week is that the GAO has – again – filed a report that Amtrak is having major financial problems. Inspector General Ken Mead worries out loud that Amtrak has taken on significant new debt, including $2.8 billion in debt and long-term capital lease obligations as of September 2000, and $300 new debt with the Penn Station mortgage. That makes $3.1 billion of debt, which calls for $191 million in interest payments to service the debt. Of that $191 million, $27 million in interest is related to the Penn Station mortgage, or, in other terms, about the equivalent of nine new sleeping cars or nine new dining cars.

   Many finance professionals worry that debt, such as the Penn Station mortgage, adds a huge burden to Amtrak’s fragile financial picture, but MAKES NO NEW CONTRIBUTIONS to income or revenue; it merely reshuffles existing debt and/or covers predicted operating expenses. So, it will take other new revenues from other sources to pay off this debt, further reducing the brightness of a financial future for Amtrak as we know it today.

6. More and more of the mainstream news media is beginning to take notice of Amtrak’s financial plight, and is reporting the story both in print and on network television. ABC TV added the latest zingers in a report this week, beginning the piece by saying, “Amtrak is in its worst financial shape ever.” The piece goes downhill from there.

   Like most of the news media, the report inaccurately states the financial status of many routes, including saying things like “Of Amtrak’s 41 routes, 10 lost more than $100 per passenger. And only a handful are profitable.”

So, Amtrak has lived to haul passengers another week.

After everything and every insult that Amtrak as a corporation has gone through and be subjected to, can we all agree to get rid of the ludicrous term “guest” and bring back reality by calling people who ride on trains “passengers?” Enough is enough. Guests stay in hotels or in your home. Passengers ride trains, planes, ships and automobiles.

Trying to redesign the definition at this late date ranks right up there with the last days of Eastern, Braniff, and National airlines. Please don’t insult us by trying to make us believe that if we call reality something else, then reality will be redefined. That only works on television on situation comedies that have politically correct writers and censors.

Bruce Richardson
Jacksonville, Florida