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[quote user="V.Payne"] Just be sure to not add the depreciation to the full cost. Remember the direct cost is about 1/0.88 x Revenue for most of the long distance trains.  Amtrak has about $200 million of large station and security expenses and about $600 million of Shared NEC infrastructure costs that the full costs try to send everywhere, I believe by a route to total revenue ratio. [/quote] Deprecation is a non-cash item that flows through the income statement.  It reflects the capitalized cost of the asset, i.e. cash expenditure at the time of purchase, interest charges, transportation-in costs, training costs, as well as any other make ready costs, less salvage value. It also includes the cost of subsequent upgrades that materially extend the life span of the asset. Amtrak uses straight line depreciation, i.e. the capitalized amounts flow through the income statement in equal chunks until the asset is retired.  It depreciates its locomotives and cars up to 42 years, but it does not break out the depreciation periods by class of equipment. In 2000 Amtrak sold 624 passenger coaches and leased them back under 12 separate lease agreements. Each had different terms. One would need access to all of these agreements to understand their terms and the impacts on the company's financials.  Most importantly would be the impacts on the cash flow statements. To show how murky the picture can get, previously Amtrak had sold 40 of its locomotives and leased them back. Subsequently, it reacquired the locomotives and recapitalized them. These transactions resulted in deferred gains and/or losses depending on the asset and the lease terms. Without inside information one would not have a clue as to the financial impact of these transactions.  As a rule, when a company sells its equipment and leases it back, it needs cash or working capital. It is willing to trade off a short term cash flow gain for higher long term cash outflows.  However, financing is dynamic. It changes every day. So it is possible that the company realized a short term deferred cash gain, and then mitigated it by a subsequent transaction that softened the longer term consequences.  However, the next paragraph, which was lifted from Amtrak's September 2012 Monthly Operating Report, suggests that it did not work out so well.  Amtrak does not report depreciation on a route level due to the distortion caused by the sale and leaseback transactions of the late 1990’s and early 2000’s. Allocating depreciation and interest would unfairly burden routes whose equipment was sold and then leased back. Those transactions caused the value of those assets to increase and therefore their depreciation to increase, which is unrelated to the actual capital cost of that equipment. A synthetic capital charge is under development and will be allocated to routes and included in this report when available.   Without access to Amtrak's books, it is not possible to know how Amtrak allocates its common costs to various routes.  I raised this point with Don Phillips, who claimed in a recent Trains article that Amtrak was assigning a disproportionate amount of the NEC costs to the long distance trains traversing the NEC.  He said that he had a contact, who he did not disclosed, who claimed that he had inside knowledge about the practice. I asked Phillips to provide me with the person's name and the numbers.  I am still waiting. The depreciation associated with Amtrak's Texas trains probably is very small.  Based on the numbers I have pulled to date, from the public information that Amtrak makes available, which I will post in the late fall or early winter, after the FY13 numbers are in, these trains hemorrhage red ink, and the red ink has been increasing at a greater rate than the increase in riders, revenues, etc.  If you have a pipeline into Amtrak's books and, therefore, can get me the depreciation numbers for Amtrak's Texas trains, it would be most helpful.
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