Enacted in December 1997, the Amtrak Reform and Accountability Act of 1997 authorized federal funding for Amtrak’s capital and operating expenses through fiscal year 2002 and repealed several provisions of federal law that limited Amtrak’s ability to manage costs and maximize revenues. In addition, 14 routes lost more than $100 per passenger carried. In making its decisions on route closures and service reductions, Amtrak examined such factors as the financial performance of each route; the effect of a route’s closure on connecting routes and the overall network; the efficient use of equipment; marketing concerns; states’ willingness to subsidize service; Amtrak’s mandate to provide national passenger rail service; and a route’s potential for improved profitability through, for example, the growth of mail and express merchandise services. In addition, the Amtrak Reform and Accountability Act directed the newly created Amtrak Reform Council to assess Amtrak’s financial performance. Amtrak’s Operating and Capital Subsidies

Since 1971, Amtrak has received about $21 billion in federal operating and capital funding to help cover the costs of providing intercity passenger rail service. Furthermore, in March 1998, Amtrak’s Board of Directors approved a revised strategic business plan for fiscal years 1998 through 2003 that projects a net loss of $845 million for fiscal year 1998—$83 million more than the $762 million net loss that occurred in fiscal year 1997. The revised plan reflects a serious cash-flow problem and Amtrak’s need to borrow substantially more money than originally planned to pay operating expenses. As discussed previously, Amtrak planned to reduce its net loss and eliminate its need for federal operating subsidies primarily by increasing revenues while controlling costs. Amtrak also is upgrading its track between Washington, D.C., and New York City to further reduce travel time by 15 minutes to 2-3/4 hours by enabling trains to travel at speeds up to 135 miles per hour. Table 2 compares how Amtrak would spend federal funds under its glidepath with how Amtrak proposes to spend its federal capital appropriation under FTA’s approach to maintenance expenses. Amtrak and FRA officials stated that these reforms will provide few, if any, immediate financial benefits and their longer-term benefits are unclear. Amtrak and FRA officials told us that the repeal of the statutory ban on contracting out work that would result in layoffs will have little, if any, immediate effect on Amtrak’s financial performance. Financial Performance of Amtrak’s Routes

This appendix presents information on (1) the effect of excluding depreciation in calculating profit and loss per passenger for each Amtrak route, fiscal year 1997; (2) the operating ratio of each Amtrak route, fiscal years 1994 through 1997; (3) the profit or loss of each Amtrak route, fiscal years 1994 through 1997; (4) revenues, expenses, and profit or loss of each Amtrak route, fiscal year 1997; (5) the ridership on each Amtrak route, fiscal years 1994 through 1997; (6) the profit or loss per passenger for each Amtrak route, fiscal years 1994 through 1997; (7) the improved financial performance of certain Amtrak routes as a result of state payments, fiscal year 1997; (8) the load factor for each Amtrak route, fiscal year 1997; (9) Amtrak routes discontinued since fiscal year 1994; and (10) the segments of Amtrak routes discontinued since fiscal year 1994.
Why GAO Did This Study

Pursuant to a legislative requirement, GAO reviewed the financial: (1) performance of Amtrak's current routes; (2) implications for Amtrak of multiyear capital requirements and declining federal operating subsidies; and (3) effect on Amtrak of reforms contained in the Amtrak Reform and Accountability Act of 1997.

What GAO Found

GAO noted that: (1) Amtrak spends almost $2 for every dollar of revenue it earns in providing intercity passenger service; (2) only the Metroliner's high-speed service between Washington, D.C., and New York City is profitable; all of Amtrak's other 39 routes operate at a loss; (3) financial performance measures highlight the problems that Amtrak routes generally are experiencing; (4) for example, 3 Amtrak routes spent more than $3 for every dollar of revenue, and 14 routes lost more than $100 per passenger in fiscal year (FY) 1997; (5) at the same time, Amtrak has improved the financial performance of several routes by negotiating support payments with affected states; (6) for example, California supplemented the revenues of two routes by about $16.5 million each in FY 1997 because these routes particularly benefited its residents; (7) any decisions about restructuring Amtrak's route system need to consider whether and how Amtrak will continue to provide national passenger service; (8) an analysis also needs to assess each route's customer demand and financial performance, the willingness of state and local governments to subsidize service, and the route's broader benefits; (9) these benefits could include providing connecting service to other routes, providing public transportation that links smaller communities with major cities, and helping to alleviate highway congestion and pollution; (10) Amtrak is in a very precarious financial position and remains heavily dependent on federal funding to pay its operating and capital expenses; (11) while Amtrak's goal is to eliminate the need for federal operating subsidies by 2002, its Board of Directors approved a revised strategic business plan in March 1998 that projected substantially higher net losses in FY 1998 and FY 1999 than were included in the previous plan; (12) to reduce these net losses, Amtrak's revised plan would use federal capital appropriations to pay for maintenance expenses that traditionally have been treated as operating expenses; (13) as a result, Amtrak would spend $800 million, or 15 percent, less for capital improvements over the next 5 years than previously planned; (14) as currently structured, Amtrak will continue to require federal capital and operating support in 2002 and well into the future; (15) the reforms included in the Amtrak Reform and Accountability Act of 1997 will have little, if any, immediate effect on Amtrak's financial performance, according to Amtrak and Federal Railroad Administration officials; and (16) the officials added that the longer-term benefits of these reforms are unclear.