Comparing 2010 to 2011
Passenger miles up 6.5%
Seat-miles up 1.2%
Salaries, wages and benefits up 8.7%
(Salaries, wages and benefits are half of Amtrak's expenses.)
This is not good.....
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
oltmannd Comparing 2010 to 2011 Passenger miles up 6.5% Seat-miles up 1.2% Salaries, wages and benefits up 8.7% (Salaries, wages and benefits are half of Amtrak's expenses.) This is not good.....
I have not had an opportunity to review the FY11 Amtrak Financials. However, the numbers that you present are not surprising. Where are the competitive drivers that would force Amtrak to conduct its operations better, faster, cheaper, with the operative word being better?
I worked for an electric utility for most of my working life. In the beginning we were a regulated monopoly, which meant that we look like, talked like, and walked like a government entity. The number of times that I almost quit during the early years is beyond count. Although we were a stockholder company, because we were a monopoly, we could pass our costs through to the rate payer as long as we could get it past the Public Utility Commission. Believe me, executive management knew how to get it past the PUC. Then competition came to Texas. And we sobered up.
With competition the universe changed. Gone where the days when we looked like a government entity. It was change or lose the franchise, which meant go out of business. As a result, amongst other things, we went from more than 17,500 employees to fewer than 10,500 employees, and the lights did not flicker once. We simply got rid of all the fat.
As long as Amtrak has a lock on intercity passenger rail services in the United States, it has no incentive to do things better, faster, cheaper. As long as its unions can appeal to political forces on Capital Hill whenever management wants to implement some serious improvements that the unions don't like, management will be hamstrung in what it can accomplish.
Speaking of management, I was blown away by the picture in the latest Trains of Boardman leaning through the window of a prototype Amtrak car with a cup of coffee in his hand. It confirmed my image, perhaps unfairly, that he would have made a good accounts payable supervisor for our company.
Sam1 oltmannd: Comparing 2010 to 2011 Passenger miles up 6.5% Seat-miles up 1.2% Salaries, wages and benefits up 8.7% (Salaries, wages and benefits are half of Amtrak's expenses.) This is not good..... I have not had an opportunity to review the FY11 Amtrak Financials. However, the numbers that you present are not surprising. Where are the competitive drivers that would force Amtrak to conduct its operations better, faster, cheaper, with the operative word being better? I worked for an electric utility for most of my working life. In the beginning we were a regulated monopoly, which meant that we look like, talked like, and walked like a government entity. The number of times that I almost quit during the early years is beyond count. Although we were a stockholder company, because we were a monopoly, we could pass our costs through to the rate payer as long as we could get it past the Public Utility Commission. Believe me, executive management knew how to get it past the PUC. Then competition came to Texas. And we sobered up. With competition the universe changed. Gone where the days when we looked like a government entity. It was change or lose of the franchise, which meant go out of business. As a result, amongst other things, we went from more than 17,500 employees to fewer than 10,500 employees, and the lights did not flicker once. We simply got rid of all the fat. As long as Amtrak has a lock on intercity passenger rail services in the United States, it has no incentive to do things better, faster, cheaper. As long as its unions can appeal to political forces on Capital Hill whenever management wants to implement some serious improvements, management will be hamstrung in what it can do to be a truly competitive, effective management team. Speaking of management, I was blown away by the picture in the latest Trains of Boardman leaning through the window of a prototype Amtrak car with a cup of coffee in his hand. It confirmed my image, perhaps unfairly, that he would have made a good accounts payable supervisor for our company.
oltmannd: Comparing 2010 to 2011 Passenger miles up 6.5% Seat-miles up 1.2% Salaries, wages and benefits up 8.7% (Salaries, wages and benefits are half of Amtrak's expenses.) This is not good.....
With competition the universe changed. Gone where the days when we looked like a government entity. It was change or lose of the franchise, which meant go out of business. As a result, amongst other things, we went from more than 17,500 employees to fewer than 10,500 employees, and the lights did not flicker once. We simply got rid of all the fat.
As long as Amtrak has a lock on intercity passenger rail services in the United States, it has no incentive to do things better, faster, cheaper. As long as its unions can appeal to political forces on Capital Hill whenever management wants to implement some serious improvements, management will be hamstrung in what it can do to be a truly competitive, effective management team.
Maybe if Hunter Harrison can't get that CP gig....
You overlook that ticket revenues were up 8.7% or $149.4 million which helped to offset the salaries & wages increase. The Net Operating Loss went from $419.9 million in FY10 to $451.5 million in FY11. Which was still well less than the $566 million operating grants provided by Congress.
The increase in personnel costs is the major reason for the reduction in force in management ranks and why the FY12 budget plan calls for a total reduction in Amtrak employees by around 500 by the end of FY12. Boardman's FY12 budget has an aggressive goal of a Net Operating Loss of $345.3 million by keeping personnel costs close to or less than FY11 numbers while increasing ticket revenue by $116 million. The US Treasury funding as per the 2008 PRIIA act to exercise the Early Buy-out Options on a number of Warrington era equipment leases are also reducing Amtrak's debt load. If Amtrak can meet the FY12 budget goals, their overall finances will be in better shape than they have been for a long time.
Passenger miles going up 6.5% while seat miles only goes up 1.2% indicates a good passenger increase with almost no added equipment (or presumably personnel). Credit should be given for this increased productivity.
Alan F oltmannd: Comparing 2010 to 2011 Passenger miles up 6.5% Seat-miles up 1.2% Salaries, wages and benefits up 8.7% (Salaries, wages and benefits are half of Amtrak's expenses.) This is not good..... You overlook that ticket revenues were up 8.7% or $149.4 million which helped to offset the salaries & wages increase. The Net Operating Loss went from $419.9 million in FY10 to $451.5 million in FY11. Which was still well less than the $566 million operating grants provided by Congress. The increase in personnel costs is the major reason for the reduction in force in management ranks and why the FY12 budget plan calls for a total reduction in Amtrak employees by around 500 by the end of FY12. Boardman's FY12 budget has an aggressive goal of a Net Operating Loss of $345.3 million by keeping personnel costs close to or less than FY11 numbers while increasing ticket revenue by $116 million. The US Treasury funding as per the 2008 PRIIA act to exercise the Early Buy-out Options on a number of Warrington era equipment leases are also reducing Amtrak's debt load. If Amtrak can meet the FY12 budget goals, their overall finances will be in better shape than they have been for a long time.
How did you come up with a net operating loss of $451.5 million in FY11? Also, presumably you mean that personnel costs went up because of the separation costs associated with the reduction in management.
At the end of the day a business has to cover all of its costs or expenditures and expenses. Amtrak does not come close to doing that, no matter what spin is put on the numbers. It never has and probably never will.
Yes, it's nice that revenue when up - that Amtrak had some mild pricing power. But for labor cost to FAR outstrip inflation in a down economy! No body is minding the store!
MidlandMike Passenger miles going up 6.5% while seat miles only goes up 1.2% indicates a good passenger increase with almost no added equipment (or presumably personnel). Credit should be given for this increased productivity.
Yes. It means they added a few cars to a few trains and then filled them up. That is good. High gasoline prices have given them a bit of pricing power, too. Also good.
Given that you should get a percent point or two in productivity improvements with no change in operation year to year, just a a regular part of doing business, compensation should have been nearly flat YOY.
Alan F The increase in personnel costs is the major reason for the reduction in force in management ranks and why the FY12 budget plan calls for a total reduction in Amtrak employees by around 500 by the end of FY12. Boardman's FY12 budget has an aggressive goal of a Net Operating Loss of $345.3 million by keeping personnel costs close to or less than FY11 numbers while increasing ticket revenue by $116 million. The US Treasury funding as per the 2008 PRIIA act to exercise the Early Buy-out Options on a number of Warrington era equipment leases are also reducing Amtrak's debt load. If Amtrak can meet the FY12 budget goals, their overall finances will be in better shape than they have been for a long time.
Well, at least there is some motion in the right direction. Dropping 500 after adding over 200 management jobs over the previous three years leaves me lukewarm, though. Amtrak needs to go on the same diet the freight RRs went on in the 1980s. Only a serious benchmarking exercise against for-profit enterprises (cruise lines, hoteliers, restaurants, freight RRs) will yield proper staffing levels.
And, once again, it is only external forces that are driving the changes. i.e. threats of privatization, Federal budget problems, etc.
Amtrak needs a real, solid railroad man who is a "true believer" in passenger service. Someone with good Class 1 experience... Unfortunately, I don't think that guy exists, and if he does, would he want the job?
oltmannd Alan F: The increase in personnel costs is the major reason for the reduction in force in management ranks and why the FY12 budget plan calls for a total reduction in Amtrak employees by around 500 by the end of FY12. Boardman's FY12 budget has an aggressive goal of a Net Operating Loss of $345.3 million by keeping personnel costs close to or less than FY11 numbers while increasing ticket revenue by $116 million. The US Treasury funding as per the 2008 PRIIA act to exercise the Early Buy-out Options on a number of Warrington era equipment leases are also reducing Amtrak's debt load. If Amtrak can meet the FY12 budget goals, their overall finances will be in better shape than they have been for a long time. Well, at least there is some motion in the right direction. Dropping 500 after adding over 200 management jobs over the previous three years leaves me lukewarm, though. Amtrak needs to go on the same diet the freight RRs went on in the 1980s. Only a serious benchmarking exercise against for-profit enterprises (cruise lines, hoteliers, restaurants, freight RRs) will yield proper staffing levels. And, once again, it is only external forces that are driving the changes. i.e. threats of privatization, Federal budget problems, etc. Amtrak needs a real, solid railroad man who is a "true believer" in passenger service. Someone with good Class 1 experience... Unfortunately, I don't think that guy exists, and if he does, would he want the job?
Alan F: The increase in personnel costs is the major reason for the reduction in force in management ranks and why the FY12 budget plan calls for a total reduction in Amtrak employees by around 500 by the end of FY12. Boardman's FY12 budget has an aggressive goal of a Net Operating Loss of $345.3 million by keeping personnel costs close to or less than FY11 numbers while increasing ticket revenue by $116 million. The US Treasury funding as per the 2008 PRIIA act to exercise the Early Buy-out Options on a number of Warrington era equipment leases are also reducing Amtrak's debt load. If Amtrak can meet the FY12 budget goals, their overall finances will be in better shape than they have been for a long time.
Johnny
Sam1 How did you come up with a net operating loss of $451.5 million in FY11? Also, presumably you mean that personnel costs went up because of the separation costs associated with the reduction in management. At the end of the day a business has to cover all of its costs or expenditures and expenses. Amtrak does not come close to doing that, no matter what spin is put on the numbers. It never has and probably never will.
The net operating loss figure come from the Amtrak Monthly reports and FY11 Annual financial report. After subtracting depreciation (which is mostly on equipment the government already paid for) and non-cash OPEBs, the net cash operating loss for FY11 was $457.5 million (the $451.5 million was a typo).
The personnel costs went up because of salary increases, overtime, and benefit cost increases. Any separation costs will be in the FY12 and beyond expenses as the first round of voluntary reduction in force separations was in December, 2011.
The employee staffing reductions are coming from both management (exempt employees) and non-exempt, with a cut of around 360 from the non-exempt Transportation employee category. These numbers can be found in the FY12 final budget along with the FY11 reports on the Amtrak website.
Amtrak's net loss from operations in FY11 was $1.3 billion. This number consists of cash and non-cash items. It includes depreciation, which is a non-cash item. It reflects reflects the amortization of past cash outflows for capital items that flowing through the income statement.
A commercial enterprise must account for its total costs. It cannot just focus on operating costs or operating margins, although they are an indicator of how operations are being managed. Even if the operating margins are improving, there is no denying that Amtrak could not survive without significant government support. Or the fact that it has accumulated losses in excess of $28 billion.
The net cash operating loss for FY11 is shown in the September 2011 Monthly Operating Report. The numbers have not been audited. Assuming it is a good number, which I am not challenging, it is a loss that has to be made up with taxpayer funds.
Interestingly, for FY11 Greyhound, which is owned by FirstGroup pic, had an operating profit of $35.9 million Euros (5.66%). And FirstGroup's UK Rail operations generated a FY11 operating profit of $52.1 million Euros (2.3%). Maybe Amtrak's Board of Directors should look into hiring Greyhound's CEO. It gets no government support, and has to compete with Amtrak, discount airlines, and personal vehicles to survive.
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