Those misleading Amtrak numbers

Posted by Fred Frailey
on Wednesday, November 26, 2014

The Wall Street Journal really needs to assign a reporter to railroads. Since Trains Magazine contributor Dan Machalaba left the paper in 2008, nobody on the staff seems to have gotten his or her hands around this industry. A pity, because the story in yesterday’s Journal concerning Amtrak’s financial results could have been a lot more informative.

Amtrak had given the Journal an early look at its press release, which said that the corporation’s federally funded operating loss had shrunk by 37 percent from fiscal 2013 (fiscal years end in September) and at $227 million was the lowest since 1973.

Dan Machalaba would have read this, picked up the phone, and begun asking people at Amtrak just how this miracle had been achieved. Amtrak’s press release gave not a clue. And the Journal reporter, whose name we shall keep to ourselves because this blog is not really about him, apparently didn’t ask.

The most cursory look at Amtrak’s Monthly Performance Report for September, the last month of fiscal 2014, would have explained what happened. So would any experience or background knowledge by the reporter, for that matter. He would remember that starting in fiscal 2014 state governments had to pony up for substantially all deficits of short-distance trains going through their states (except for the Northeast Corridor). And pages C-1 and C-2 of the monthly report would have revealed that the fully allocated losses of these short-distance trains, whose routes are less than 750 miles, had indeed fallen by $98 million due to much higher payments by the states.

But that wasn’t mentioned.

Amtrak’s real loss, by the way, was $1.1 billion, down about $190 million from fiscal 2013. That federally funded operating loss of $227 million is arrived at by subtracting from the $1.1 billion loss depreciation ($737 million) and other (I guess) non-cash items amounting to $122 million.

It’s also worth noting (see the monthly report) that capital spending by Amtrak was $238 million under budget, due to “timing of progress payments on new electric locomotives and delayed infrastructure work.” Had that budgeted money been spent, the loss would have been in the area of $1.3 billion.

But that wasn’t mentioned, either.

Finally there was this true but misleading statement in the Journal: “The Northeast Corridor, which includes the railroad’s Acela and Northeast Regional services, saw an operating surplus of $496.7 million in fiscal 2014, up from $390.1 million the previous year, Amtrak said.” Golly, the trains made gobs of money, readers must have thought. Not included in the operating profit is the capital spending need of the NEC, which is voracious. The NEC Master Plan Working Group said in 2010 that the corridor would require $52 billion in capital by 2030, and since then Amtrak has only fallen further behind. Have you ridden the NEC lately? The track is horrible.

These were a very challenging 12 months for Amtrak. Its long distance trains were savaged by winter weather and congestion of many of the main freight corridors. A lot got done, including the introduction of a new generation of electric locomotives on the NEC and planning for a new generation of high-speed trains, hopefully to be ordered in fiscal 2015.

But the true state of affairs you’d never have guessed reading yesterday’s Wall Street Journal.Fred W. Frailey

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