Misleading article about Amtrak in Business Insider

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Misleading article about Amtrak in Business Insider
Posted by pgj999 on Friday, November 8, 2019 6:13 PM

Greetings, fellow railfans, from Park City, Utah!

I was troubled today to read this article in Business Insider, which I think is quite misleading with regards to Amtrak's need for continued government assistance.  The headline of the article suggests Amtrak will "turn a profit" soon, while strikingly,  the body of the article never explains how. Exactly how will Amtrak recover the $700 million plus in capital investments without government assistance?

 I certainly hope columnists at Trains and the folks at RPA (formerly NARP) will try to correct this ridiculously misleading article.

https://www.businessinsider.com/amtrak-reports-record-ridership-revenue-profit-by-2020-2019-11

Best regards,

Patrick J.

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Posted by SD70Dude on Friday, November 8, 2019 6:21 PM

Unlike some others on this forum I do not read through the details of Amtrak's financial reports, but I have kept an eye on its ridership and revenue growth, and I have been thinking for the past few years that they might actually break even on operations one of these days.  This is a feat that few (if any) North American public transit agencies (what Amtrak essentially is) ever achieve, and should not be downplayed.

But breaking even at the farebox is something completely different from being profitable.  To truly achieve that feat you need to cover all your capital costs as well, which Amtrak shows no signs of doing in the near future.

Greetings from Alberta

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Posted by pgj999 on Friday, November 8, 2019 6:37 PM

I've since been told that Business Insider isn't a very high-quality news outlet, that mainly just creates attention-getting headlines in order to sell ads and "clickbait"...

 

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Posted by MidlandMike on Friday, November 8, 2019 9:27 PM

We were in Park City in May.  Has Salt Lake recovered after the 150th Golden Spike Anniversary yet?

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Posted by Gramp on Saturday, November 9, 2019 2:00 AM

It is so difficult to find credible, objective news reporting today.

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Posted by Deggesty on Saturday, November 9, 2019 7:57 AM

MidlandMike

We were in Park City in May.  Has Salt Lake recovered after the 150th Golden Spike Anniversary yet?

 

Mike, I am sure that those here who took part in the celebration remember it well. However, the news media give no evdence that they remember anything about it.

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Posted by PNWRMNM on Saturday, November 9, 2019 7:59 AM

pgj

What you saw was an ATK press release. No more, no less.

Mac McCulloch

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Posted by oltmannd on Saturday, November 9, 2019 9:19 AM

So, Amtrak's operating revenue includes subsidies from the states as well as farebox receipts.  But, that's okay.  

DC is generally "for" infrastructure investment (including capital for Amtrak) but "against" operating subsidies.  They don't care if state and local provide subsidy, as long is it's not them.

This puts Amtrak in a better position, long term.

-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/

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Posted by JPS1 on Saturday, November 9, 2019 10:09 AM
Amtrak’s reported 2019 operating loss has not been formalized in its year end financials.  It would not be unusual for the final 2019 numbers to be different, although the results probably will not change significantly.  The trend toward an operating profit in 2020 is likely to continue.
 
Amtrak had an Adjusted Operating Loss of $168.1 million in 2018.  But the operating results are only part of the financial picture.  After factoring in depreciation, interest, OPEBs, state capital payment amortizations, etc., the fully allocated loss was $868.2 million.
 
According to reports in the Wall Street Journal, Fox Business News, CNN Business News, etc., Amtrak is reporting a 2019 Adjusted Operating Loss of $29.8 million, which is a significant improvement over 2018.  But the total loss will be substantially higher.
 
Amtrak is still heavily dependent on the U.S. Government for grants, loans, etc.  In 2018, the company received more than $2 billion in federal paid in capital.  Approximately $372 million was used for operating purposes, with the balance devoted to capital improvements, i.e. new equipment, infrastructure, etc. 
 
Amtrak is the largest single beneficiary of RRIF loans.  It has borrowed more than $3 billion under the program at essentially the same rate as the U.S. Treasury weighted average borrowing rate. 
 
The improvement in the company financials started on Joseph Boardman’s watch; they appear to be accelerating under Anderson’s watch.
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Posted by charlie hebdo on Saturday, November 9, 2019 11:00 AM

Commercial airports are typically constructed using government bond issues at lower than corporate rates.  Airlines are beneficiaries. Do their payments cover all operating costs and debt maintenance?   Is there a problem with that?

Highways are also constructed using government funding and bond issues. Trucking and bus companies are beneficiaries.  The fuel taxes are woefully short of funding capital or maintenance.  Is there a problem with that? 

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Posted by CMStPnP on Saturday, November 9, 2019 11:32 AM

SD70Dude
Unlike some others on this forum I do not read through the details of Amtrak's financial reports, but I have kept an eye on its ridership and revenue growth, and I have been thinking for the past few years that they might actually break even on operations one of these days.  This is a feat that few (if any) North American public transit agencies (what Amtrak essentially is) ever achieve, and should not be downplayed. But breaking even at the farebox is something completely different from being profitable.  To truly achieve that feat you need to cover all your capital costs as well, which Amtrak shows no signs of doing in the near future.

I think they could be profitable at it.   They need to be a lot more innovative and agile and they need a dedicated source of financing to get their house in order in the short term.    I think dividing the railroad into corridors and LD trains is a good idea as it segregates state and federal funding and mandates a lot easier into seperate divisions.    That probably makes Accounting and Financial Management easier as well.    If they give Anderson a chunk of money for LD as well as decently fund Corridors and Corridor development,  I think you would see break even in Corridors first followed by LD at some point.    Right now Amtrak is severely cash starved and cannot even afford to experiment with the LD line in any meaningful way.

I would like to see Amtrak have enough freedom and money to attempt a second frequency of Auto Train.   Halt the Sunset Limited and Cardinal.   Bring back old LD trains or parts of LD train routes that now make sense.   Spend some decent marketing money on determining if Amtrak station placement is in the right geographic market to maximize ridership, etc.

Additionally, would be great to have Amtrak start a consulting arm that could walk a state or group of states through the process of funding and establishing new LD routes via assistance with grant or loan application writing to get funds from feds, ridership studies, auditing of study results, intermediary with Class I frieght railroads, etc.    Some of that is going on now with Amtrak but only in parts and only if it becomes almost obvious to the brain dead that the applicant is serious about a passenger train route.

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Posted by samfp1943 on Saturday, November 9, 2019 2:55 PM

CMStPnP wrote the following post[in part]: "...I would like to see Amtrak have enough freedom and money to attempt a second frequency of Auto Train.   Halt the Sunset Limited and Cardinal.   Bring back old LD trains or parts of LD train routes that now make sense.   Spend some decent marketing money on determining if Amtrak station placement is in the right geographic market to maximize ridership, etc..".

I'd like to place an order in the Dinner for a piece of pie in the sky,

                                                 with a cup of coffee, to be served by R. Anderson

                                   DinnerChef     

Bang Head                                                                 

 

 

 


 

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Posted by SD70Dude on Saturday, November 9, 2019 2:58 PM

samfp1943

CMStPnP wrote the following post[in part]: "...I would like to see Amtrak have enough freedom and money to attempt a second frequency of Auto Train.   Halt the Sunset Limited and Cardinal.   Bring back old LD trains or parts of LD train routes that now make sense.   Spend some decent marketing money on determining if Amtrak station placement is in the right geographic market to maximize ridership, etc..".

I'd like to place an order in the Dinner for a piece of pie in the sky,

                                                 with a cup of coffee, to be served by R. Anderson

                                   DinnerChef     

Bang Head                                                                

You might actually get that last bit, as long as it's not in a dining car.....

Greetings from Alberta

-an Articulate Malcontent

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Posted by Overmod on Saturday, November 9, 2019 5:45 PM

CMStPnP
I think dividing the railroad into corridors and LD trains is a good idea as it segregates state and federal funding and mandates a lot easier into seperate divisions.    That probably makes Accounting and Financial Management easier as well. 

What I see coming, perhaps 'dramatically' within a month of the mandate, is Amtrak dividing a given LD run into 'corridors' (for state co-funding') and intervening sections that are preserved with 'Federal interest' in keeping a coherent long-distance network.  What happens if a given State welshes on its "obligations" will be interesting to watch; what is reasonably certain is that Anderson et al. would have to be very, very careful not to blink, and also very, very carefully coordinate with the various State representatives in the Congress to keep intrusions from that quarter minimized and 'on board with the Federal plan'.

 

The idea of the 'consulting arm' is a reasonable one, but not with Amtrak or its OIG being 'in charge'.  Better if the various Amtrak people are brought in as consultants or 'experts' and the coordination and project documentation handled by people from a less political and 'involved' source.

 

I also think that it might be possible to try an 'Auto-Train lite' between some of these city pairs by running a small number of appropriate auto-racks on the end of an existing consist, upping the power appropriately as more and more Genesis units become 'surplus to ordinary requirements', and see firsthand how demand develops, what its cyclical characteristics might be, etc.  I doubt that any new 'pure' Auto-Train would cover the potential risk during its start-up phase, particularly if there were poor experiences or word-of-mouth in the first weeks and months.

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Posted by BaltACD on Saturday, November 9, 2019 8:05 PM

You can parse financial figures to tell virtually ANY STORY you want.

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Posted by Paul Milenkovic on Sunday, November 10, 2019 9:10 PM

BaltACD

You can parse financial figures to tell virtually ANY STORY you want.

 

And what story do you want to tell us?

If GM "killed the electric car", what am I doing standing next to an EV-1, a half a block from the WSOR tracks?
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Posted by BaltACD on Monday, November 11, 2019 6:35 AM

Paul Milenkovic
 
BaltACD

You can parse financial figures to tell virtually ANY STORY you want. 

And what story do you want to tell us?

Figures lie, liars figure.  How much do you trust the integrity of those providing the figures - do they have ulterior motives in providing the figures they are presenting?  What is their ultimate aim in the figures they provided?

https://www.railwayage.com/freight/obfuscation-is-challenging-clearing-it-up-more-so/

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Posted by charlie hebdo on Monday, November 11, 2019 7:25 AM

What are your ulterior motives for always trotting out old cliches about numbers? 

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Posted by Paul Milenkovic on Monday, November 11, 2019 7:47 AM

BaltACD

 

 
Paul Milenkovic
 
BaltACD

You can parse financial figures to tell virtually ANY STORY you want. 

And what story do you want to tell us?

 

Figures lie, liars figure.  How much do you trust the integrity of those providing the figures - do they have ulterior motives in providing the figures they are presenting?  What is their ultimate aim in the figures they provided?

https://www.railwayage.com/freight/obfuscation-is-challenging-clearing-it-up-more-so/

 

Such, to me, is not a useful answer.

Over on another blog a day ago, on a Web site far, far away, there is a discussion by space enthusiasts about how much space Shuttle launches had cost (the number is uncertain but it was a high figure) in relation to how much NASAs new Space Launch System is going to cost (again, no one can tell, but it probably will be an even higher figure).

The space-exploration-and-commercialization enthusiast community can at least talk about what the object of their enthusiasm will end up costing and whether non-enthusiasts who don't fully appreciate why the enthusiasts are enthusiastic, will balk at the price tag in the end.  They also talk about whether their are alternatives to the NASA proposals involving public-private partnerships or whether those approaches have their own limitations.

Not only are there those in the passenger-train advocacy community who take a cynical view regarding cost numbers for the reasons cited, I cannot even point train advocates to the discussions by the space people because the reply is often "What we propose is helping people whereas what the space people want is a boondogle and a total waste of money."  Oh, kay.

I "get" the part that the folks at Business Insiders are all part of the Big Oil, Big Concrete, Trucking Company, automotive manufacturing lobby/political conspiracy with a dash of Reason and Heritage Foundation thrown in, and they all lie to hate on passenger trains because that is what they do.

But the dismissal of any and all criticism of the cost burden of passenger trains as being manipulated figures by haters, this point of view indeed arises in many other enthusiast communities not related to trains.  At some point, one has to take a hard look at the financials and whether they can be sold to beyond the community of enthusiasts.

If GM "killed the electric car", what am I doing standing next to an EV-1, a half a block from the WSOR tracks?
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Posted by charlie hebdo on Monday, November 11, 2019 8:25 AM

Good points,  Paul.

I've noticed many times in various  fields and disciplines that people who cannot summon facts,  especially data,  choose to denigrate those stats, whatever their type.  Most people have zero understanding of statistics or accountancy, having never taken even one course.  So whether from ignorance or irritation at being incapable of rationally disputing another's opinion,  the old adage "shoot the messenger" applies.

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Posted by charlie hebdo on Monday, November 11, 2019 8:44 AM

If some posters have hard evidence to support their contentions that Amtrak is cooking the books,  show us.  And not some opinion piece by an RPA columnist. 

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Posted by BaltACD on Monday, November 11, 2019 9:48 AM

There is a sport metaphor - 'You are never as good as you look when you win and you are never as bad as you look when you lose'.

Anyone that publishes financial numbers is telling a 'story'.  Good or bad, they are telling a story.  Depending upon the 'audience' the numbers are prepared for, things will be prepared to influence that audience in the manner that those makng the presentation desire. This has been happening since finances have been reported using Arabic Numerals and mathmatics.  

I am not a forencic accountant - I am just a all around skeptic.

I might add that the only financial numbers CSX and its predecessors ever published that I believed were the number on pay checks, and I only believed them to the extent that they didn't bounce (they never did, unlike what happened to Penn Central employees).

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Posted by CMStPnP on Monday, November 11, 2019 2:01 PM

charlie hebdo
If some posters have hard evidence to support their contentions that Amtrak is cooking the books,  show us.  And not some opinion piece by an RPA columnist. 

It was somewhat obvious to this poster that Ed Ellis was not exactly honest about the financial condition of the Pullman company, just via outside observation based on his interviews with the press that avoided the subject, problems with the cars (specifically the hastily dug inspection pit....which should have been in the plans somewhere), passenger news accounts that rode the cars, reports of malfunctioning toilets, etc.   All pointed to a shoe string financial operation to me.

The real surprise to me came when it became clear his entire shortline empire was operating on fuel vapors as well.   I didn't expect that but you could see the Pullman operation was barely holding on from the time it started.    The reported defective wheels did it for me as a rail operation to avoid.   That is something thats should have been caught before the cars were back on the rails.

So you really do not need to have financial stats or the kind of hard evidence your demanding all the time.   Usually the public can tell if a company is financially hurting long before the stockholders are officially told.

Pssst, by the way, Ed Ellis worked for Amtrak prior to attempting these independent business lines on his own.

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Posted by aegrotatio on Monday, November 11, 2019 9:14 PM

Business Insider is a glorified blog.

Unfortunately for journalism, Forbes also has a glorified blog that is slightly better than BI's, and the uninformed also quote that source as being "journalism" like they do Business Insider.

 

Protip: If the address starts with "forbes.com/sites/personsname" then it's a blog, not Forbes magazine.

 

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Posted by charlie hebdo on Monday, November 11, 2019 10:37 PM

CMStPnP: Yep,  Ed Ellis is a crook but not synonymous with Amtrak. He was clearly a crook even though the nostalgia buffs loved him.

BALT: My point remains with nothing presented to contradict it.  It's easy peasy to make wild charges with zero evidence to back it up. 

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Posted by BaltACD on Monday, November 11, 2019 11:32 PM

charlie hebdo
BALT: My point remains with nothing presented to contradict it.  It's easy peasy to make wild charges with zero evidence to back it up. 

Nobody creates a report wherein they don't make every effort to 'accentuate the positive' (whatever that may be in the context of the report) and 'hide the negatives' (whatever they may be in the context of the report).

As we know, companies keep 3 sets of books - One that they use to run the company, one that they use to keep the SEC satisfied and a third that they use to keep the IRS and other tax organizations happy.  Within those three 'narrative bases' they can spin a multitude of 'stories' that they want to present to the public for the specific purposes that the do present 'stories' to the public. 

The trick to reading these things is understanding what they are trying to minimize and hide

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Posted by CMStPnP on Tuesday, November 12, 2019 8:49 PM

BaltACD
As we know, companies keep 3 sets of books - One that they use to run the company, one that they use to keep the SEC satisfied and a third that they use to keep the IRS and other tax organizations happy. 

Not completely correct.   I can tell you this is true of most companies including the C Corp I ran.   One set of books, three different reporting requirements.   Each reporting requirement does not require a independent look at the books.   The actual reporting requirement is the view of the books presented to each group.

So it is more correct to say three different views of the books versus three different sets of the books.   The views are not different from a perspective of committing fraud rather they are different because each agency wants a different window or view.    As they are unable or unwilling to agree on a consistent one view suits all approach.   Also, the SEC is feared more than the IRS because the SEC's law enforcement powers are far more extensive.

Maintaining three different sets of books in a dynamic operations environment would be a nightmare for most companies.   Except for hotels who believe it or not have three seperate ledgers.   One ledger for debits and credits before the guest arrives.   One Ledger for debits and credits while the guest is in house and a third Ledger for debits and credits after the guest checks out.    Former hotel night auditor here.    The three ledger approach was interesting and they definitely needed a computer system to process the three ledgers and balance them, very confusing to do so manually, I can tell you.    Hotels are the only time I have seen three different sets of books.   All other companies I worked for had one General Ledger.

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Posted by Paul Milenkovic on Tuesday, November 12, 2019 9:30 PM

CMStPnP

 

 
BaltACD
As we know, companies keep 3 sets of books - One that they use to run the company, one that they use to keep the SEC satisfied and a third that they use to keep the IRS and other tax organizations happy. 

 

Not completely correct.   I can tell you this is true of most companies including the C Corp I ran.   One set of books, three different reporting requirements.   Each reporting requirement does not require a independent look at the books.   The actual reporting requirement is the view of the books presented to each group.

So it is more correct to say three different views of the books versus three different sets of the books.   The views are not different from a perspective of committing fraud rather they are different because each agency wants a different window or view.    As they are unable or unwilling to agree on a consistent one view suits all approach.   Also, the SEC is feared more than the IRS because the SEC's law enforcement powers are far more extensive.

Maintaining three different sets of books in a dynamic operations environment would be a nightmare for most companies.   Except for hotels who believe it or not have three seperate ledgers.   One ledger for debits and credits before the guest arrives.   One Ledger for debits and credits while the guest is in house and a third Ledger for debits and credits after the guest checks out.    Former hotel night auditor here.    The three ledger approach was interesting and they definitely needed a computer system to process the three ledgers and balance them, very confusing to do so manually, I can tell you.    Hotels are the only time I have seen three different sets of books.   All other companies I worked for had one General Ledger.

 

"Was it over when the Germans bombed Pearl Harbor?

(Germans?  Forget it, he's rolling.)"

If GM "killed the electric car", what am I doing standing next to an EV-1, a half a block from the WSOR tracks?

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