Amtrak in another hole with $1.3 billion operating loss

Amtrak is in another financial hole after posting a $1.3 billion operating loss last fiscal year and again receiving far less than it requested in federal subsidies, an influential transportation watchdog said on Sunday. The Transportation Department's inspector general, Kenneth Mead, said in a report to Congress that the nation's only city-to-city passenger railroad faces a gigantic cash crunch as well as a mounting backlog of infrastructure projects, like bridge repairs, that can wait no longer.
"Continued deferral brings Amtrak closer to a major point of failure on the system but no one knows where or when such a failure will occur," Mead warned.
He recommended Congress, which has approved $1.2 billion in fiscal 2005 subsidies for Amtrak, step in immediately to provide "clear direction" for long-term passenger rail priorities. This, Mead said, could include wholesale service cuts and other painful measures that have been avoided in recent years.
Mead's conclusions carry weight on Capitol Hill. A similar analysis by his office in 2002 blew the whistle on Amtrak's sagging finances after the railroad had been assuring lawmakers over several years it was making progress on weaning itself from subsidies.
Beleaguered Amtrak almost shut down later that year after three decades of service. It was rescued by additional government help and a reluctant Bush administration, which wants to dismantle the railroad and give states who want service a greater stake in rail operations.
Amtrak generates revenue from three primary sources - ticket sales, minimal contributions from states and a huge annual federal subsidy. But other conditions hinder its ability to boost revenue or cut big expenses.
Ridership continues to set records (more than 25 million in fiscal 2004), but Amtrak is hobbled by expensive and ageing equipment and other components of its infrastructure that limit its ability to expand service on popular routes or start new ones. To draw and keep customers, the railroad also has to hold down fares, which further erodes its bottom line.