(See table 1.1.) Objectives, Scope, and Methodology

This report’s objectives were to assess (1) Amtrak’s financial and operating conditions, (2) the likelihood that Amtrak can overcome its financial and operating problems, and (3) alternative actions that could be considered in deciding on Amtrak’s future mission and on commitments to fund the railroad. In this report, • chapter 2 describes the extent to which Amtrak’s financial condition has • chapter 3 describes the increased costs facing Amtrak over the next several years that will make recovery from the financial and operating problems difficult; • chapter 4 assesses the extent to which revenues are likely to increase, pay for these increased costs, and improve Amtrak’s financial condition; and • chapter 5 assesses the likelihood that Amtrak will be able to continue to provide nationwide service at the current federal subsidy level. Amtrak’s actions to reduce operating expenses have not been sufficient to offset the shortfall in revenues. Although Amtrak reduced its budgeted expenses, continued declines in revenues, cash, and working capital threaten Amtrak’s ability to provide high quality intercity passenger rail service and compete effectively for customers. Amtrak is unlikely to be able to address these challenges under the current operating environment and at the current funding level. 3.6.) This facility has almost no maintenance structures. 3.7.) On April 30, 1996, most of Amtrak’s initial 25-year operating agreements with freight railroads will expire, and new agreements must be negotiated. 3.8.) Lacking the resources to purchase the new equipment that would increase the quality of service and constrained to match operating costs with federal subsidies, Amtrak has been forced to cut costs, delay maintenance of equipment, and generally let the quality and attractiveness of train travel deteriorate further. High quality nationwide passenger service of the present scope that might attract and retain passengers would require substantially higher levels of additional support, particularly for capital investment. Redefining System and Realigning Service Could Improve Amtrak’s Financial Condition and Service Quality

The Congress could redefine Amtrak’s role and mission by restructuring and realigning Amtrak’s route system to a smaller basic network that would continue to be eligible for federal funding. First, it is not clear what would be privatized. Therefore, even if privatized, Amtrak will continue to need federal or state funds to meet its capital needs. This is an important assumption.
Why GAO Did This Study

Pursuant to a legislative requirement, GAO reviewed Amtrak's financial and operating condition, focusing on: (1) whether Amtrak can overcome its financial and operating problems; and (2) alternative actions Amtrak could take to meet its future funding requirements.

What GAO Found

GAO found that: (1) Amtrak's financial condition has declined steadily since 1990 and its ability to provide nationwide service is seriously threatened; (2) although Amtrak's funding has increased to almost $1 billion in 1995, the increase has not been sufficient to cover its operating deficiencies and capital investment, equipment, and facility improvement requirements; (3) although Amtrak has assumed debt, deferred maintenance, and reduced staffing to address its capital shortfall, these actions have diminished the quality and reliability of Amtrak's service; (4) it is unlikely that Amtrak can overcome its financing, capital investment, and service quality problems without significant increases in passenger revenues or funding; (5) Amtrak revenues have suffered from an unfavorable operating environment and intense fare competition from airlines; (6) Amtrak faces additional equipment and facility maintenance costs and must negotiate new agreements with freight railroads to access their track; (7) Amtrak could substantially increase its funding by making capital investments and improving service quality to retain current riders and attract new ones, but this approach would be costly and difficult to achieve in the current budget environment; (8) the privatization of Amtrak is not feasible because few private firms would be willing to assume the risks of providing intercity passenger service; and (9) Amtrak could realign or reduce its current route system and retain service in the locations where it could cost-effectively carry the largest number of passengers.