Amtrak's Strategic Business Plan: Progress to Date (Letter Report,
07/24/96, GAO/RCED-96-187).

GAO reviewed Amtrak's Strategic Business Plan, focusing on: (1) specific
planned actions and their expected results; (2) Amtrak's success in
achieving financial improvements and its progress toward realizing its
long-term goal of self-sufficiency; and (3) Amtrak's efforts to monitor
the plan's implementation.

GAO found that: (1) by fiscal year (FY) 2001, Amtrak plans to reduce its
annual operating loss to about $180 million, which it will offset with
funds from sources other than federal subsidies; (2) Amtrak plans to
double its revenues and hold operating cost increases to less than 20
percent through FY 2001; (3) Amtrak's actions reduced its FY 1995
operating loss by $171 million, which exceeded the planned reduction by
$3 million; (4) Amtrak expects its 1995 loss-reduction efforts to
produce $315 million in annual savings beginning in FY 1996; (5) Amtrak
planned additional FY 1996 actions to reduce its operating loss by
another $61.6 million, but severe winter weather reduced revenues and
increased operating costs; (6) if Amtrak reaches its revised FY 1996
goal of a $5.2-million reduction, it will have reduced its operating
loss by 30 percent overall; (7) two Amtrak business units are meeting or
nearly meeting their goals, but one is not; (8) Amtrak has made progress
in its plan's first 18 months, but it is too early to determine whether
Amtrak will reach its operating self-sufficiency goal, because success
depends on further improvements and realizing certain funding, service,
and productivity assumptions; (9) two units' top management monitors
implementation of specific plan actions and financial goals, while the
third unit focuses on whether it is operating within its budget and
makes department directors responsible for implementing and monitoring
individual plan actions; and (10) Amtrak prepares monthly and quarterly
reports based on monthly unit reports.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  RCED-96-187
     TITLE:  Amtrak's Strategic Business Plan: Progress to Date
      DATE:  07/24/96
   SUBJECT:  Railroad transportation operations
             Cost control
             Losses
             Future budget projections
             Strategic planning
             Financial management
             Railroad industry
             Federal aid to railroads
             Differential subsidies
             Federal corporations
IDENTIFIER:  Amtrak Northeast Corridor
             Amtrak Northeast High-Speed Rail Improvement Project
             Amtrak Strategic and Business Plan
             Amtrak Power Partnership Program
             
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Cover
================================================================ COVER


Report to Congressional Recipients

July 1996

AMTRAK'S STRATEGIC BUSINESS PLAN -
PROGRESS TO DATE

GAO/RCED-96-187

Amtrak's Strategic Business Plan

(343877)


Abbreviations
=============================================================== ABBREV


Letter
=============================================================== LETTER


B-270348

July 24, 1996

Congressional Recipients

Since May 1971, when Amtrak took over responsibility for operating
the nation's intercity passenger trains, the federal government has
provided the corporation with over $18 billion, primarily to cover
annual operating losses (the difference between operating revenues
and expenses, excluding federal and state subsidies) and make capital
investments.\1 Despite this federal support, by 1994 Amtrak's
financial and operating condition had declined to the point at which
its long-term survivability was seriously threatened.\2 At the same
time, federal budget considerations have been making it increasingly
difficult for the Congress to provide its historic level of support. 
In response to this financial crisis, in 1995 Amtrak developed a
Strategic Business Plan to increase revenues and cut expenses, with
the goal of eliminating its need for a federal operating subsidy
(i.e., achieving operating self-sufficiency) by fiscal year 2002,
although Amtrak assumes that federal capital assistance would
continue.  Amtrak's success in implementing its Plan will go a long
way toward deciding the future of intercity passenger rail service in
the United States. 

To assist the Congress as it determines the future of federal support
for Amtrak, this report (1) describes the specific actions Amtrak
plans to take and the expected results from those actions; (2)
reviews Amtrak's success to date in achieving financial improvements
and its progress toward realizing the longer-term goal of operating
self-sufficiency; and (3) describes Amtrak's efforts in monitoring
the Plan's implementation. 


--------------------
\1 If inflation is taken into account, Amtrak has received over $29
billion in real 1995 dollars since 1971. 

\2 Intercity Passenger Rail:  Financial and Operating Conditions
Threaten Amtrak's Long-Term Viability (GAO/RCED-95-71, Feb.  6,
1995). 


   BACKGROUND
------------------------------------------------------------ Letter :1

To address its financial crisis and make its operations more
efficient, in 1995 Amtrak undertook a major corporate restructuring,
along with developing its Strategic Business Plan.  The restructuring
involved dividing Amtrak's intercity passenger service operations
into three distinct operating units, called strategic business units. 
The Northeast Corridor Unit is responsible for operations on the East
Coast between Virginia and Vermont, including high-speed Metroliner
service, which currently exists between Washington, D.C., and New
York and is being extended to Boston.  The West Coast Unit is
responsible for services in California, Oregon, and Washington.  This
unit operates only one long-distance passenger train, and many of its
services, especially in California, receive state financial support. 
Finally, the Intercity Unit provides the remainder of the nation's
intercity rail passenger service, including most of the
long-distance, cross-country trains.  Each strategic business unit
develops its own plan and manages its own operations, although under
the direction of the corporate parent in Washington, D.C., which also
provides business services, such as legal support. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :2

To eliminate the need for federal operating assistance by fiscal year
2002, Amtrak plans to reduce its annual operating loss to about $180
million by fiscal year 2001, an amount that Amtrak plans to fund
primarily from other sources, including state and local
contributions.  Amtrak plans to almost double revenues, while holding
cost increases to less than 20 percent through fiscal year 2001 to
achieve its planned savings.\3

Amtrak's actions reduced its 1995 operating loss by $171 million from
what it was projected to be if operations had continued unchanged. 
This reduction was $3 million less than planned.  The service
reductions and eliminations, reductions of management staff, fare
increases, and other changes made in fiscal year 1995 are projected
to yield annual savings of $315 million beginning in fiscal year
1996.  In fiscal year 1996, Amtrak planned additional actions to
reduce its operating loss by $61.6 million in addition to the $315
million savings generated in 1996 by its fiscal year 1995 actions. 
However, after two quarters of operations in fiscal year 1996,
revenues are below target and expenses are higher than planned
because of the severe winter weather, and Amtrak has reduced its goal
from $61.6 million to $5.2 million.\4 Overall, Amtrak reduced its
operating loss about 29 percent through its fiscal year 1995 actions. 
If Amtrak meets this new lower goal, the operating loss will drop by
less than 1 percent more. 

While Amtrak has made progress during the first 18 months that the
Strategic Business Plan has been in place, it is too early to
forecast if the corporation will achieve the long-term goal of
operating self-sufficiency.  Meeting that goal is predicated on
several critical assumptions, including continued federal capital
support, which entails full funding to implement high-speed rail
service between New York and Boston; large revenue increases;
improvements in productivity that require negotiations with Amtrak's
labor unions; and increased state support.  For example, $5.5 billion
in capital investment is required by fiscal year 2001, $3.2 billion
of which is expected to come from federal grants, and the balance
from increased passenger revenues and state contributions. 

The Northeast Corridor and Intercity units are monitoring the
implementation of the specific actions outlined in the Strategic
Business Plan; the West Coast Unit focuses on whether it is operating
within its budget and relies on its managers to monitor the
implementation of the individual actions for which they are
responsible.  The units report monthly to the parent corporation,
which reviews the results and prepares corporationwide monthly and
quarterly reports.  This information will be critically important to
the Congress as it evaluates Amtrak's progress toward operating
self-sufficiency and determines the amount of capital and operating
funds to provide to the corporation. 


--------------------
\3 Twenty percent is less than Amtrak's expected rate of inflation
for its costs over the same time period.  Therefore, Amtrak is
forecasting that its costs will decrease in real terms. 

\4 In April and May 1996, the first 2 months of the third quarter,
Amtrak's expenses continued to rise and revenues again fell short of
those included in the Plan.  Amtrak plans to compensate for most of
these problems, but it does expect that projections based on third
quarter results will include an increased operating loss. 


   AMTRAK PLANS TO INCREASE
   REVENUES AND STATE SUPPORT AND
   CONTROL COSTS TO ELIMINATE NEED
   FOR FEDERAL OPERATING SUBSIDY
------------------------------------------------------------ Letter :3

To eliminate the need for a federal operating subsidy, Amtrak plans
to increase revenues, hold down costs, and increase state
contributions.  Amtrak's projected annual operating loss is to be
reduced to $180 million in fiscal year 2001\5 in part by increasing
revenues from $1.461 billion in fiscal year 1995 to $2.565 billion in
fiscal year 2001.\6 During this same period, expenses are planned to
increase less than 20 percent, from $2.305 billion to $2.745 billion. 
Increasing the portion of costs borne by each state for the services
they support financially is planned to increase state funding from
$36 million in fiscal year 1995 to $132 million in fiscal year 2001. 

Figure 1 shows Amtrak's financial projections for reducing operating
losses, holding down cost increases, and increasing revenues.  In
each instance, the figure presents Amtrak's financial projections
based on what would occur if (1) Amtrak took no actions to address
its financial condition (i.e., if it had not taken any actions in
fiscal year 1995); (2) Amtrak took no further actions to improve its
financial condition after fiscal year 1995; and (3) Amtrak
successfully implements its Plan in fiscal year 1996 and beyond. 
Tables 1 through 3 show the specific amounts for each projection for
each fiscal year. 

   Figure 1:  Amtrak's Financial
   Projections for Reducing
   Operating Losses, Holding Down
   Cost Increases, and Increasing
   Revenues, Fiscal Years
   1995-2001

   (See figure in printed
   edition.)

   Notes:  Without plan : 
   Projections based on actual
   fiscal year 1994 results
   (before the Strategic Business
   Plan was developed).  1995
   projected:  Projections based
   on actual fiscal year 1995
   results if no further
   improvements were made.  1996
   plan:  Projections based on
   successful implementation of
   the Strategic Business Plan in
   fiscal year 1996 and beyond.

   (See figure in printed
   edition.)



                                               Table 1
                               
                                 Operating Losses (Fiscal Years 1995-
                                                2001)

                                        (Dollars in millions)

                        1995
                    (actual)        1996        1997        1998        1999        2000        2001
-----------------  ---------  ----------  ----------  ----------  ----------  ----------  ----------
Without plan       ($1,014.5  ($1,089.7)  ($1,166.1)  ($1,240.7)  ($1,330.7)  ($1,437.4)  ($1,542.1)
                           )
1995 projected     ($843.8)\    ($773.9)    ($839.2)    ($859.6)    ($880.1)    ($904.4)    ($930.9)
                           a
1996 plan                       ($712.3)    ($690.4)    ($642.0)    ($562.3)    ($278.8)    ($180.3)
----------------------------------------------------------------------------------------------------
\a This amount takes into account $30 million from accelerating the
revenues from a prior sale of tax benefits.  Without these revenues,
the fiscal year 1995 operating loss would have been $876.8 million. 



                                               Table 2
                               
                                  Revenues (Fiscal Years 1995-2001)

                                        (Dollars in millions)

                        1995
                    (actual)        1996        1997        1998        1999        2000        2001
-----------------  ---------  ----------  ----------  ----------  ----------  ----------  ----------
Without plan        $1,339.6    $1,393.2    $1,448.9    $1,506.9    $1,567.1    $1,629.8    $1,695.0
1995 projected     $1,461.3\    $1,449.6    $1,493.1    $1,537.9    $1,584.0    $1,631.5    $1,680.5
                           a
1996 plan                       $1,530.9    $1,625.5    $1,776.2    $1,935.7    $2,346.1    $2,564.8
----------------------------------------------------------------------------------------------------
\a This amount includes $30 million from accelerating the revenues
from a prior sale of tax benefits, without which the revenues would
have been $1.4309 billion. 



                                               Table 3
                               
                                  Expenses (Fiscal Years 1995-2001)

                                        (Dollars in millions)

                        1995
                    (actual)        1996        1997        1998        1999        2000        2001
-----------------  ---------  ----------  ----------  ----------  ----------  ----------  ----------
Without plan        $2,354.1    $2,482.9    $2,615.0    $2,747.6    $2,897.8    $3,067.2    $3,237.1
1995 projected      $2,305.1    $2,223.5    $2,332.3    $2,397.5    $2,464.1    $2,535.9    $2,611.4
1996 plan                       $2,243.2    $2,315.9    $2,418.2    $2,498.0    $2,624.9    $2,745.1
----------------------------------------------------------------------------------------------------

Amtrak's ambitious plan to almost double revenues by 2001 includes
several actions intended to attract more riders and increase the
revenue generated by each passenger.  Marketing efforts and fare
increases are the bases for increasing passenger revenues.  In fiscal
year 1996, a $15 million advertising investment is projected to
generate an additional $35 million in revenues, and fare increases
are planned to generate almost $16 million in additional revenues. 
Other revenue-generating plans include increasing (1) the amount of
service Amtrak provides under commuter rail service contracts (adding
almost $9 million in fiscal year 1996), (2) reimbursable work for
state departments of transportation and others (adding $16.5 million
in fiscal year 1996), and (3) mail and express service (adding almost
$10 million in fiscal year 1996). 

Amtrak plans to control expenses through productivity improvements,
operating efficiencies, and selective restructuring of routes and
services.  For example, Amtrak plans to save $15 million in fiscal
year 1996 by better matching equipment to service needs.  It also
plans to reduce costs by $4 million in fiscal year 1996 by improving
the productivity of Amtrak's reservations office.  Improving price
negotiations, specifications, and other aspects of the procurement of
goods and services is projected to generate $56.9 million in savings
in fiscal year 1996. 

The increase in state contributions is expected to occur as Amtrak
shifts an increasing portion of the costs of state-sponsored rail
services to the states.  Currently, the states pay only a portion of
the costs, but Amtrak is increasing the portion annually and plans to
receive 100 percent of these costs from the states by fiscal year
1999.  State contributions are planned to almost double from $36
million in fiscal year 1995 to $67.4 million in fiscal year 1996 as
this transition begins. 


--------------------
\5 Over the past few years, Amtrak's operating loss, adjusted for
nonrecurring charges, had been about $800 million annually.  If
Amtrak had not taken action to address its financial condition, it
estimates that its operating loss in fiscal year 2001 would have been
$1.542 billion. 

\6 All revenue and expense figures are in future year dollars and are
adjusted for inflation. 


   AMTRAK GENERALLY MET FINANCIAL
   TARGETS FOR FISCAL YEAR 1995
   BUT IS PROJECTING TO BE
   OVERBUDGET IN FISCAL YEAR 1996
------------------------------------------------------------ Letter :4

In fiscal year 1995, the first year under its Strategic Business
Plan, Amtrak reduced its operating loss from the $1.0145 billion
projected without the implementation of the Plan to $843.8 million,
or by $171 million,\7 which was about $3 million less than it had
planned.  The fiscal year 1995 savings resulted primarily from
reducing and eliminating some routes and services ($54.2 million),
cutting management positions ($30 million), and raising fares ($23.5
million); all of these amounts exceeded what was projected in the
Plan.  Retiring older equipment and negotiating productivity
improvements with labor, which were planned to reduce the operating
loss by $11 million and $26 million, respectively, were elements of
the Plan that were not successfully implemented.  Because the states
elected to "buy back" some of the services Amtrak had planned to
eliminate, the corporation was not able to achieve its planned cost
savings from retiring some of its oldest equipment that is used on
these routes.  To date, Amtrak has made little progress in
negotiating new productivity improvements, such as reducing the size
of its train crews, with its labor unions.  Amtrak currently is
purchasing new equipment so that it can retire the older equipment
and has proposed legislation for contracting out and for negotiating
new labor agreements.  Amtrak has compensated for the savings the
originally anticipated actions were to have generated. 

Amtrak projects that the fiscal year 1995 actions will reduce the
operating loss by $315 million beginning in fiscal year 1996 as the
changes made during fiscal year 1995 are in place and accruing
savings for a full year.  The Plan included actions to reduce the
fiscal year 1996 operating loss by an additional $61.6 million by
increasing revenues $81 million while holding expenses to a net
increase of only $19.8 million.\8 Thus, the operating loss was to
have been reduced from $1.0897 billion projected without the
implementation of the Plan to $712.3 million, but on the basis of
second quarter results, Amtrak revised its fiscal year 1996
projection in April 1996.  The revised projected operating loss is
$768.7 million.  The $56.4 million shortfall from the projected
operating loss shown in table 1 was primarily due to the severe
winter weather in fiscal year 1996. 


--------------------
\7 This includes $30 million from accelerating the revenues from a
prior sale of tax benefits.  Without these revenues, the operating
loss in fiscal year 1995 would have been about $877 million. 

\8 Amtrak was to incur $187.9 million in additional expenses, but
productivity improvements were to reduce expenses by $107.9 million,
and other actions were to reduce expenses by an additional $60.2
million. 


      WEST COAST AND NORTHEAST
      CORRIDOR UNITS ARE MEETING
      OR NEARLY MEETING GOALS, BUT
      THE INTERCITY UNIT IS NOT
---------------------------------------------------------- Letter :4.1

The results for each strategic business unit vary.  The West Coast
and Northeast Corridor units both exceeded their fiscal year 1995
planned savings and are projected to meet or nearly meet their fiscal
year 1996 targets.  In contrast, the Intercity Unit did not meet its
planned reduction in its fiscal year 1995 operating deficit by $41.7
million and is projected to end fiscal year 1996 $19.4 million
overbudget.  Thus, the Intercity Unit--responsible for the bulk of
Amtrak's services and projected improvements--has been substantially
overbudget in both years.  Table 4 shows the planned and actual
revenues, expenses, and operating losses for each unit. 



                                     Table 4
                     
                      Strategic Business Units' Planned and
                     Actual Revenues, Expenses, and Operating
                           Losses, Fiscal Years 1995-96

                              (Dollars in millions)


                                   Operating                           Operating
            Revenues    Expenses      losses    Revenues    Expenses      losses
---------  ---------  ----------  ----------  ----------  ----------  ----------
West Coast Unit
--------------------------------------------------------------------------------
Planned       $110.8      $239.3    ($128.5)      $145.4      $272.4    ($127.0)
Actual\a      $130.5      $253.0    ($122.5)      $144.2      $268.3    ($124.1)

Northeast Corridor Unit
--------------------------------------------------------------------------------
Planned       $739.2      $961.1    ($221.9)      $894.2    $1,028.0    ($133.8)
Actual\a      $827.4    $1,046.7    ($219.3)      $876.8    $1,019.5    ($142.7)

Intercity Unit
--------------------------------------------------------------------------------
Planned       $419.5      $594.5    ($175.0)      $478.4      $688.7    ($210.3)
Actual\a      $456.3      $673.0    ($216.7)      $464.6      $694.3    ($229.7)
--------------------------------------------------------------------------------
\a The fiscal year 1996 figures are those currently projected on the
basis of results through the second quarter. 

The West Coast Unit, which operates commuter service along several
routes as well as intercity service in and between California,
Oregon, and Washington, had the smallest share of Amtrak's services
and costs and the smallest target for fiscal year 1995 savings ($13
million).  The West Coast Unit is expanding its services in fiscal
year 1996, which will increase its operating deficit slightly for
fiscal year 1996 but result in future savings if the projected
ridership and revenues materialize.  The West Coast Unit is focusing
on increasing the amount of commuter service it provides under
contract and on aggressive marketing and pricing strategies to reduce
its share of the operating loss.  Although ahead of the Plan's
projections in the first half of fiscal year 1996, the West Coast
Unit is now projecting a $2.9 million budget shortfall for year's end
because of lost revenues and increased costs caused by the severe
winter weather. 

In fiscal year 1995, the Northeast Corridor Unit, which generated
more than 55 percent of Amtrak's passenger revenues while incurring
45 percent of Amtrak's expenses, reduced its operating loss $2.6
million more than planned.  After the first two quarters of fiscal
year 1996, the Northeast Corridor's operating loss is higher than
planned, but specific actions, such as productivity improvements in
the mechanical shop, are under way to largely compensate for this by
the year's end.  However, the future success of the Northeast
Corridor depends on the availability of capital to make the
investments necessary to complete the electrification of the line and
introduce high-speed (maximum speed of 150 mph) rail service between
Boston and New York City by fiscal year 2000 and to rebuild the
southern end of the corridor between Washington, D.C., and New York,
which is in a serious state of disrepair. 

In contrast, the Intercity Unit--which is the heart of the nationwide
intercity network responsible for more than 80 percent of Amtrak's
total route miles of service--was $41.7 million overbudget in fiscal
year 1995.  For fiscal year 1996, the Intercity Unit is not meeting
its portion of the Plan's goal and after two quarters is projecting a
year-end operating loss $19.4 million over its budget.  For fiscal
year 1995, the Plan had assumed that more than a dozen of the
Intercity Unit's routes would be eliminated or subject to service
reductions.  But many of the proposed eliminations or reductions were
"bought back" by the states in which the routes are operated,
increasing the Intercity Unit's operating loss in fiscal year 1995
because the states did not fund 100 percent of the costs of these
routes and services.  However, the "buybacks" only account for about
$10 million of the Unit's $41.7 million fiscal year 1995 budget
overrun and are not a factor in the projected fiscal year 1996
shortfall because the Plan took them into account for this fiscal
year.  The Intercity Unit has experienced several unanticipated
problems, including a high turnover of senior management, which has
interrupted the Plan's implementation several times; unexpected
declines in ridership as a result of fare increases; and, in fiscal
year 1996, the severe winter weather that reduced ridership and
increased operating costs. 


      AMTRAK STILL HAS A LONG WAY
      TO GO TO MEET LONG-TERM
      GOALS
---------------------------------------------------------- Letter :4.2

Even though Amtrak as a whole reduced its annual operating loss by
$171 million in the first year of the Strategic Business Plan,
significant improvements are necessary in the remaining 5 years of
the Plan for the corporation to meet its longer-term goal of
operating self-sufficiency.  Although Amtrak reduced its operating
loss as planned in fiscal year 1995, it will not achieve its original
goal for fiscal year 1996.  Additionally, the future-year projections
are based on several critical assumptions that may not be realized,
including continued federal capital support; the introduction of
high-speed rail service in the Northeast Corridor and concurrent
revenue increases; improvements in productivity that require
negotiations with Amtrak's unions; and increased state operating
support. 

To date, Amtrak has been relatively successful at reaching its
financial targets by compensating for planned actions that have not
materialized.  For example, revenues from contracts to provide
commuter rail service increased 70 percent more than planned,
improved productivity for track maintenance generated 75 percent more
savings than planned, and the management staff was reduced 12 percent
more than planned.  However, Amtrak has reduced its operating loss by
about 29 percent through its fiscal year 1995 actions.  Even if it
were fully successful in implementing the fiscal year 1996 actions,
it would reduce the operating loss by only an additional 8
percent--and second quarter revisions reduce this projection to less
than 1 percent.  If no further actions were taken, Amtrak would still
have an operating loss in excess of $850 million in fiscal year 2001. 
Therefore, to meet its goal of eliminating the need for a federal
operating subsidy by fiscal year 2002, Amtrak still needs to
substantially increase revenues and significantly improve
productivity after fiscal year 1996. 


      ASSUMPTIONS ABOUT THE
      AVAILABILITY OF CAPITAL ARE
      KEY TO AMTRAK'S ACHIEVING
      ITS GOALS
---------------------------------------------------------- Letter :4.3

The most important factor underpinning Amtrak's program for achieving
its longer-term goal of operating self-sufficiency is that capital
funds must be available so that it can make the investments needed to
provide attractive and competitive services and thereby significantly
increase its revenues.  Amtrak plans to invest $5.5 billion by fiscal
year 2001 in its systems, equipment, and facilities--$3.2 billion of
which is expected to come from federal capital grants.  Amtrak's
fiscal year 1996 federal capital grant was $345 million, which
slightly exceeded the amount anticipated in its Plan, but in future
years Amtrak's Plan anticipates significantly increased federal
capital assistance to allow it to introduce high-speed rail service
in the Boston-New York market, bring the Northeast Corridor as a
whole to a state of good repair, and upgrade services on other
routes. 

Most of the remaining capital needs are to be met through greater
state contributions, increased passenger revenues, and the proceeds
from the Northeast Corridor Unit's planned Power Partnership.\9 These
additional moneys are critical to Amtrak as a whole because they are
necessary to support the corporation's planned capital investments in
the Northeast Corridor and elsewhere.  Revenues have increased 6
percent since fiscal year 1994, and state shares for state-sponsored
services are projected to double by fiscal year 1996; but the largest
revenue increases are projected to result from electrification and
the introduction of high-speed rail service from Boston to New York
in fiscal years 2000 and 2001.  These improvements alone are
projected to increase Amtrak's total passenger revenues by 21 percent
in fiscal year 2000. 

Though Amtrak did not receive the federal legislative authority that
would have allowed it to become a utility broker, it is working state
by state to obtain the authority to market electricity carried over
its lines, and it continues to project revenues from the Power
Partnership.  Even though the Power Partnership is not yet in place,
the Northeast Corridor Unit estimates that it or other commercial
projects will generate $100 million in fiscal year 1997.  The unit
has not provided any information to support this projection or to
demonstrate a backup plan for generating the $100 million, which is
already committed to capital improvements. 


--------------------
\9 The Power Partnership involves Amtrak's generating revenues and
reducing its own utility costs by purchasing, transmitting, and
distributing electrical power. 


   MONITORING THE PLAN'S
   IMPLEMENTATION IS IMPORTANT
------------------------------------------------------------ Letter :5

Top management at the Northeast Corridor and Intercity units is
systematically monitoring whether specific actions in the Strategic
Business Plan are implemented and meeting financial targets; the West
Coast Unit's senior management monitors whether it is operating
within its budget and delegates to its department directors the
monitoring of whether specific actions have been successfully taken. 

The Northeast Corridor Unit has established a database that includes
the specific actions to be taken, such as introducing self-service
ticketing and reducing management staffing, and the monthly projected
and actual financial results of each action.  This system,
supplemented with status reports on individual actions, is used by
senior management to monitor the unit's progress, identify any
problems early on, and develop ways to compensate for actions that
are not generating the expected results.  The Intercity Unit recently
implemented a similar system for monitoring the implementation of
specific actions, although financial results are not determined for
each.  The Intercity Unit's monitoring system focuses on the actions
developed to address the fiscal year 1996 projected shortfall (based
on the second quarter results) and is also being used to document
whether planned actions were actually taken in fiscal year 1995 and
the first two quarters of fiscal year 1996.  The West Coast Unit's
senior management uses monthly financial and performance reports to
monitor whether it is within its budget; department directors are
responsible for implementing the Plan's actions within their
jurisdiction and for reporting any problems associated with these
actions.  Each strategic business unit reports its results monthly to
the corporate level, where the results are verified and consolidated
into corporationwide monthly and quarterly reports. 

Amtrak's success to date in implementing the Strategic Business Plan
provides the Congress with a framework for determining the level of
capital and operating funds Amtrak will receive.  Amtrak's future
progress in implementing its Plan could be critical in determining
the continued availability of intercity passenger rail service in the
United States and the level of federal support necessary to maintain
this service. 


   AGENCY COMMENTS AND OUR
   EVALUATION
------------------------------------------------------------ Letter :6

We provided copies of a draft of this report to Amtrak for its review
and comment.  We met with Amtrak officials--including the Chief
Financial Officer and the Vice President for Government and Public
Affairs--who provided comments.  Amtrak agreed with the information
presented and the observations made throughout the report and
considered it a well-prepared, balanced report.  Technical comments
provided by Amtrak have been incorporated where appropriate. 


   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :7

To identify the actions Amtrak plans to take to improve its financial
condition, review its progress to date towards achieving improvements
and its longer-term goal of operating without a federal operating
subsidy, and describe its monitoring of the Strategic Business Plan's
implementation, we obtained and analyzed data from Amtrak.  These
data included Amtrak's Strategic Business Plan and the business plans
for each unit; internal monitoring reports; and public monthly,
quarterly, and annual reports.  We also conducted interviews with
Amtrak officials at the Northeast Corridor Unit in Philadelphia,
Pennsylvania; the Intercity Unit in Chicago, Illinois; the West Coast
Unit in Los Angeles and San Francisco, California; and corporate
headquarters in Washington, D.C. 

We conducted our review from September 1995 through June 1996 in
accordance with generally accepted government auditing standards.  We
did not independently verify the accuracy of the data provided by
Amtrak. 


---------------------------------------------------------- Letter :7.1

We are sending copies of this report to the Secretary of
Transportation; the President, Amtrak; and interested congressional
committees.  Copies are available to others upon request and are
available via the Internet. 

Major contributors to this report are listed in appendix I.  Please
contact me at (202) 512-2834 if you or your staff have any questions. 

John H.  Anderson, Jr.
Director, Transportation and
 Telecommunications Issues


List of Recipients

The Honorable Larry Pressler
Chairman
The Honorable Ernest F.  Hollings
Ranking Minority Member
Committee on Commerce, Science,
 and Transportation
United States Senate

The Honorable Mark O.  Hatfield
Chairman
The Honorable Robert C.  Byrd
Ranking Minority Member
Committee on Appropriations
United States Senate

The Honorable Trent Lott
Chairman
The Honorable Daniel K.  Inouye
Ranking Minority Member
Subcommittee on Surface Transportation
 and Merchant Marine
Committee on Commerce, Science,
 and Transportation
United States Senate

The Honorable Frank R.  Lautenberg
Ranking Minority Member
Subcommittee on Transportation
Committee on Appropriations
United States Senate

The Honorable J.  James Exon
United States Senate

The Honorable Bud Shuster
Chairman
The Honorable James L.  Oberstar
Ranking Minority Member
Committee on Transportation and Infrastructure
House of Representatives

The Honorable Bob Livingston
Chairman
The Honorable David R.  Obey
Ranking Minority Member
Committee on Appropriations
House of Representatives

The Honorable Frank R.  Wolf
Chairman
The Honorable Ronald D.  Coleman
Ranking Minority Member
Subcommittee on Transportation
 and Related Agencies
Committee on Appropriations
House of Representatives

The Honorable Susan Molinari
Chairman
The Honorable Bob Wise
Ranking Minority Member
Subcommittee on Railroads
Committee on Transportation and Infrastructure
House of Representatives

The Honorable John D.  Dingell
House of Representatives


MAJOR CONTRIBUTORS TO THIS REPORT
=========================================================== Appendix I

RESOURCES, COMMUNITY, AND ECONOMIC
DEVELOPMENT DIVISION, WASHINGTON,
D.C. 

Phyllis Scheinberg, Associate Director
Francis Mulvey, Assistant Director
Laurie S.  Zeitlin, Evaluator-in-charge
John Skeen
Joseph Warren

CHICAGO OFFICE

John Rose


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