Deteriorated Financial and Operating Conditions Threaten Long-Term Viability

T-RCED-95-98: Published: Feb 7, 1995. Publicly Released: Feb 7, 1995.

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GAO discussed its recent report on Amtrak's financial and operating condition. GAO noted that: (1) Amtrak's deteriorating financial and operating condition jeopardizes its ability to provide quality services; (2) federal subsidies have not covered the gap between Amtrak's revenues and expenses; (3) Amtrak actions to reduce its losses have diminished service quality and reliability, which in turn has decreased ridership and revenues; (4) Amtrak needs over $4 billion to repair its equipment, facilities, and track, but increasing funding shortfalls and expected expenses will severely hamper, if not block, Amtrak's ability to make necessary repairs; (5) Amtrak has developed a strategy that would close the gap between its losses and federal support for fiscal year 1995, but the success of the plan is dependent on government financial support; (6) higher subsidies may not be possible due to budget constraints; (7) the nationwide rail system would probably cease to exist if Amtrak is privatized because no Amtrak route currently earns enough revenue to cover its costs; (8) Amtrak may have to reduce its service to its most travelled routes in order to operate within current or decreased funding levels; and (9) Amtrak could continue less profitable routes and offer high-speed trains outside of the Northeast Corridor if states and other entities make the necessary investments and cover operating losses.

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