Figure 1 shows Amtrak’s financial projections for reducing operating losses, holding down cost increases, and increasing revenues. It also plans to reduce costs by $4 million in fiscal year 1996 by improving the productivity of Amtrak’s reservations office. Amtrak Generally Met Financial Targets for Fiscal Year 1995 but Is Projecting to Be Overbudget in Fiscal Year 1996

In fiscal year 1995, the first year under its Strategic Business Plan, Amtrak reduced its operating loss from the $1.0145 billion projected without the implementation of the Plan to $843.8 million, or by $171 million, which was about $3 million less than it had planned. The Plan included actions to reduce the fiscal year 1996 operating loss by an additional $61.6 million by increasing revenues $81 million while holding expenses to a net increase of only $19.8 million. West Coast and Northeast Corridor Units Are Meeting or Nearly Meeting Goals, but the Intercity Unit Is Not

The results for each strategic business unit vary. However, Amtrak has reduced its operating loss by about 29 percent through its fiscal year 1995 actions. Even if it were fully successful in implementing the fiscal year 1996 actions, it would reduce the operating loss by only an additional 8 percent—and second quarter revisions reduce this projection to less than 1 percent. Monitoring the Plan’s Implementation Is Important

Top management at the Northeast Corridor and Intercity units is systematically monitoring whether specific actions in the Strategic Business Plan are implemented and meeting financial targets; the West Coast Unit’s senior management monitors whether it is operating within its budget and delegates to its department directors the monitoring of whether specific actions have been successfully taken. Each strategic business unit reports its results monthly to the corporate level, where the results are verified and consolidated into corporationwide monthly and quarterly reports. Scope and Methodology

To identify the actions Amtrak plans to take to improve its financial condition, review its progress to date towards achieving improvements and its longer-term goal of operating without a federal operating subsidy, and describe its monitoring of the Strategic Business Plan’s implementation, we obtained and analyzed data from Amtrak.
Why GAO Did This Study

GAO reviewed Amtrak's Strategic Business Plan, focusing on: (1) specific planned actions and their expected results; (2) Amtrak's success in achieving financial improvements and its progress toward realizing its long-term goal of self-sufficiency; and (3) Amtrak's efforts to monitor the plan's implementation.

What GAO Found

GAO found that: (1) by fiscal year (FY) 2001, Amtrak plans to reduce its annual operating loss to about $180 million, which it will offset with funds from sources other than federal subsidies; (2) Amtrak plans to double its revenues and hold operating cost increases to less than 20 percent through FY 2001; (3) Amtrak's actions reduced its FY 1995 operating loss by $171 million, which was $3 million less than expected; (4) Amtrak expects its 1995 loss-reduction efforts to produce $315 million in annual savings beginning in FY 1996; (5) Amtrak planned additional FY 1996 actions to reduce its operating loss by another $61.6 million, but severe winter weather reduced revenues and increased operating costs; (6) if Amtrak reaches its revised FY 1996 goal of a $5.2-million reduction, it will have reduced its operating loss by 30 percent overall; (7) two Amtrak business units are meeting or nearly meeting their goals, but one is not; (8) Amtrak has made progress in its plan's first 18 months, but it is too early to determine whether Amtrak will reach its operating self-sufficiency goal, because success depends on further improvements and realizing certain funding, service, and productivity assumptions; (9) two units' top management monitors implementation of specific plan actions and financial goals, while the third unit focuses on whether it is operating within its budget and makes department directors responsible for implementing and monitoring individual plan actions; and (10) Amtrak prepares monthly and quarterly reports based on monthly unit reports.