Intercity Passenger Rail:
Amtrak's Progress in Improving Its Financial Condition Has Been Mixed
RCED-99-181: Published: Jul 9, 1999. Publicly Released: Jul 19, 1999.
- Full Report:
Pursuant to a congressional request, GAO followed up on its report on Amtrak's financial performance, focusing on: (1) Amtrak's overall financial performance in fiscal year (FY) 1998; (2) the prospects for Amtrak to meet its financial goals for operating self-sufficiency outlined in its most recent strategic business plan; and (3) the extent to which current and anticipated federal funding and recently enacted legislative reforms aimed at helping Amtrak better control its costs are likely to help improve its financial condition.
GAO noted that: (1) Amtrak's overall losses increased in FY 1998 after several years of improvement; (2) in FY 1998, Amtrak's net loss was $930 million, the largest loss in the last 10 years; (3) by comparison, Amtrak's net loss in FY 1997 was $762 million; (4) Amtrak has made progress in reducing its reliance on federal operating support; (5) however, between now and 2002, it needs to achieve about 5 times as much in financial improvements as it has been able to achieve over the past 4 years to reach operational self-sufficiency; (6) Amtrak's strategic business plan, approved by its Board of Directors in October 1998, estimates that ongoing and planned initiatives will result in a cumulative net impact of $1.6 billion from FY 1999 through FY 2002, primarily through increases in revenues as a result of taking business plan actions; (7) however, uncertainty surrounds Amtrak's ability to achieve this net impact and to reach operational self-sufficiency by FY 2002; (8) furthermore, Amtrak's expectations to increase revenues through other initiatives are based on critical assumptions that have yet to be tested in the marketplace; (9) current and anticipated annual federal funding and recently enacted reforms aimed at helping Amtrak better control its costs will likely have little short-term impact on improving its overall financial condition; (10) Amtrak plans to use nearly $1 billion of the $1.6 billion its expects to receive in federal capital appropriations over the next 3 fiscal years for maintenance rather than capital improvements; (11) while maintenance is important for preserving assets and Amtrak's FY 1999 capital appropriation could be used for equipment maintenance, Amtrak's plans to continue to use capital appropriations in this way means it will forgo or delay capital investment projects that could increase future revenues and reduce future costs; (12) however, Amtrak's Board of Directors has approved plans for $1.3 billion of capital improvements from the $2.2 billion made available to it through the Taxpayer Relief Act of 1997; (13) in addition, while the Amtrak Reform and Accountability Act of 1997 provided Amtrak greater flexibility in its business operations, the reforms provide few financial benefits in the short term; and (14) GAO found this condition continues to exist largely because Amtrak and its unions have not completed negotiations over labor protection arrangements and reforms for contracting out work.