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Amtrak to end food service losses
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<p>[quote user="ecoli"]</p> <p>[quote user="Sam1"]</p> <p>Five years to eliminate the losses on its food and beverage services? Wow! It is a good thing Amtrak does not have to play in a competitive market. Can you image McDonald's or Chili's saying that it will eliminate the losses on its restaurants in five years? A business, especially a so-called established business, does not get that much time to turn around its losses.</p> <p>[/quote]</p> <p>I thought I'd check the veracity of the last sentence of that paragraph. The financial press releases from American Airlines are available at <a href="http://phx.corporate-ir.net/phoenix.zhtml?c=117098&p=quarterlyearnings">http://phx.corporate-ir.net/phoenix.zhtml?c=117098&p=quarterlyearnings</a>. They show annual losses for 2008, 2009, 2010, 2011, and 2012, at which point American declared bankruptcy and (probably thanks to the ability to apply cramdowns to its vendors, creditors, and employees courtesy of the bankruptcy laws) started showing a profit. (For one of those years, the press release trumpets an annual "net profit" excluding "special items" but a loss overall. I'm going to be a curmudgeon and say that a loss is a loss.)</p> <p>Yet American Airlines is still around, and is still considered valuable enough that US Airways is fighting the US Justice department in court to be allowed to merge with American. So I would say that contrary to the assertion above, an established business does get 5 years to turn around its losses.</p> <p>I don't contend this should make us happy that Amtrak's timeline is so long, just that there's a disconnect between reality and slogans about the invariable wonderfulness of private corporations. [/quote]</p> <p>You have taken one example and generalized it. Bad logic. </p> <p>Food service is an ancillary line. It is not a core competency for Amtrak or the airlines. Comparing food service to the corporation as a whole is not a good match. Bankruptcy has nothing to do with food service on Amtrak.</p> <p>The beauty of the competitive market place lies in the reality that businesses that continually stuff it up go belly up, and society stops wasting resources on them. It is what Joseph Schumpeter called creative destruction. The business graveyard is full of examples, including Eastern Airlines, Northeastern Airlines, People Air Express, etc. The list goes on and on. On the other hand, once a government agency or activity is locked in to place, getting rid of it is nearly impossible. It continually drains taxpayer dollars.</p>
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