Intercity Passenger Rail: Amtrak's Financial Crisis Threatens Continued
Viability (Testimony, 04/23/97, GAO/T-RCED-97-147).

GAO discussed Amtrak and the future of intercity passenger rail in the
United States, focusing on: (1) Amtrak's financial condition and
progress toward operating self-sufficiency; (2) Amtrak's need for, and
use of, capital funds; and (3) factors that will play a role in Amtrak's
future viability.

GAO noted that: (1) Amtrak's financial condition is still very
precarious and heavily dependent on federal operating and capital funds;
(2) GAO previously reported that Amtrak's financial condition had
deteriorated steadily since 1990 and that Amtrak was unlikely to
overcome its financial problems without significant increases in
passenger revenues and/or subsidies from federal, state, and local
governments; (3) in response to its deteriorating financial condition,
Amtrak in 1995 and 1996 developed strategic business plans designed to
increase revenues and reduce cost growth; (4) however, GAO has found
that in the past 2 years, passenger revenues, adjusted for inflation,
have generally declined, and in fiscal year (FY) 1996, the gap between
operating deficits and federal operating subsidies began to grow again
to levels exceeding those of FY 1994, when the continuation of Amtrak's
nationwide passenger rail service was severely threatened; (5) at the
end of FY 1996, the gap between the operating deficit and federal
operating subsidies was $82 million; (6) capital investment continues to
play a critical role in supporting Amtrak's business plans and
ultimately in maintaining Amtrak's viability; (7) such investment will
not only help Amtrak retain revenues by improving the quality of its
service, but will be important in facilitating the revenue growth
predicted in the business plans; (8) in both 1995 and 1996, GAO reported
that Amtrak faced significant capital investment needs to, among other
things, bring its equipment and facilities systemwide and its tracks in
the Northeast Corridor into a state of good repair and to introduce
high-speed rail service (at speeds of up to 150 miles per hour) between
Washington and Boston; (9) Amtrak will need billions of dollars in
capital investment for these and other projects; (10) it will be
difficult for Amtrak to achieve operating self-sufficiency by 2002 given
the environment within which it operates; (11) Amtrak is relying heavily
on capital investment to support its business plans, which envision a
significant increase in capital funding support, possibly from a
dedicated funding source such as the Intercity Passenger Rail Trust fund
that would be established by S. 436; (12) Amtrak is also relying greatly
on revenue growth and cost containment to achieve its goal of
eliminating federal operating support; and (13) the economic and compet*

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

 REPORTNUM:  T-RCED-97-147
     TITLE:  Intercity Passenger Rail: Amtrak's Financial Crisis 
             Threatens Continued Viability
      DATE:  04/23/97
   SUBJECT:  Railroad transportation operations
             Railroad industry
             Cost control
             Losses
             Future budget projections
             Strategic planning
             Capital
             Trust funds
             Financial management
             Federal aid to railroads
IDENTIFIER:  Amtrak Strategic and Business Plan
             Amtrak Northeast Corridor
             Intercity Passenger Rail Trust Fund
             Amtrak Strategic Capital Plan
             
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Cover
================================================================ COVER


Before the Committee on Finance, U.S.  Senate

For Release
on Delivery
Expected at
10:00 a.m.  EDT
Wednesday
April 23, 1997

INTERCITY PASSENGER RAIL -
AMTRAK'S FINANCIAL CRISIS
THREATENS CONTINUED VIABILITY

Statement of Phyllis F.  Scheinberg,
Associate Director, Transportation Issues,
Resources, Community, and Economic
Development Division

GAO/T-RCED-97-147

GAO/RCED-97-147T


(343886)


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

  FRA -
  NECIP -

============================================================ Chapter 0

Mr.  Chairman and Members of the Committee: 

We appreciate the opportunity to testify today on Amtrak and the
future of intercity passenger rail in the United States.  As you
know, over the last several years, we have testified before the
Congress and issued a number of reports on Amtrak's financial
condition, its Strategic Business Plan, and the status of the
Northeast Corridor.\1 We are continuing to monitor Amtrak's progress
as it attempts to address its financial problems and free itself from
federal operating subsidies by 2002. 

Our statement today presents preliminary information from our ongoing
work looking at Amtrak's progress in achieving this operating
self-sufficiency.  In particular, we are updating information from
our July 1996 and February 1995 reports on Amtrak's financial
condition and progress toward self-sufficiency; commenting on
Amtrak's need for, and use of, capital funds; and discussing some of
the factors that will play a role in Amtrak's future viability.  In
summary, our ongoing work shows the following: 

  -- Amtrak's financial condition is still very precarious and
     heavily dependent on federal operating and capital funds.  We
     previously reported that Amtrak's financial condition had
     deteriorated steadily since 1990 and that Amtrak was unlikely to
     overcome its financial problems without significant increases in
     passenger revenues and/or subsidies from federal, state, and
     local governments.  In response to its deteriorating financial
     condition, Amtrak in 1995 and 1996 developed strategic business
     plans designed to increase revenues and reduce cost growth. 
     However, we have found that in the past 2 years, passenger
     revenues, adjusted for inflation, have generally declined, and
     in fiscal year 1996, the gap between operating deficits and
     federal operating subsidies began to grow again to levels
     exceeding those of fiscal year 1994, when the continuation of
     Amtrak's nationwide passenger rail service was severely
     threatened.  At the end of fiscal year 1996, the gap between the
     operating deficit and federal operating subsidies was $82
     million.

  -- Capital investment continues to play a critical role in
     supporting Amtrak's business plans and ultimately in maintaining
     Amtrak's viability.  Such investment will not only help Amtrak
     retain revenues by improving the quality of its service but will
     be important in facilitating the revenue growth predicted in the
     business plans.  In both 1995 and 1996, we reported that Amtrak
     faced significant capital investment needs to, among other
     things, bring its equipment and facilities systemwide and its
     tracks in the Northeast Corridor into a state of good repair and
     to introduce high-speed rail service (at speeds of up to 150
     miles per hour) between Washington and Boston.  Amtrak will need
     billions of dollars in capital investment for these and other
     projects.

  -- It will be difficult for Amtrak to achieve operating
     self-sufficiency by 2002 given the environment within which it
     operates.  First, Amtrak is relying heavily on capital
     investment to support its business plans, which envision a
     significant increase in capital funding support--possibly from a
     dedicated funding source, such as the Intercity Passenger Rail
     Trust Fund that would be established by S.  436.  Second, Amtrak
     is also relying greatly on revenue growth and cost containment
     to achieve its goal of eliminating federal operating support. 
     The economic and competitive environment within which Amtrak
     operates may limit revenue growth, and Amtrak will continue to
     find it difficult to take those actions (such as route and
     service adjustments) necessary to reduce costs. 


--------------------
\1 Intercity Passenger Rail:  The Financial Viability of Amtrak
Continues to Be Threatened (GAO/T-RCED-97-94, Mar.  13, 1997);
Amtrak's Strategic Business Plan:  Progress to Date (GAO/RCED-96-187,
July 24, 1996); Northeast Rail Corridor:  Information on Users,
Funding Sources, and Expenditures (GAO/RCED-96-144, June 27, 1996);
Amtrak:  Early Progress Made in Implementing Strategic and Business
Plan, but Obstacles Remain (GAO/T-RCED-95-227, June 16, 1995);
Intercity Passenger Rail:  Financial and Operating Conditions
Threaten Amtrak's Long-Term Viability (GAO/RCED-95-71, Feb.  6,
1995).  The Northeast Corridor is the area between Washington, D.C.,
and Boston, Massachusetts. 


   BACKGROUND
---------------------------------------------------------- Chapter 0:1

Amtrak was created by the Rail Passenger Service Act of 1970 to
operate and revitalize intercity passenger rail service.  Prior to
its creation, intercity passenger rail service was provided by
private railroads, which had continually lost money, especially after
World War II.  The Congress gave Amtrak specific goals, including
providing modern, efficient intercity passenger service; helping to
alleviate the overcrowding of airports, airways, and highways; and
giving Americans an alternative to automobiles and airplanes to meet
their transportation needs.  Through fiscal year 1997, the federal
government has invested over $19 billion in Amtrak.  (App.  I shows
the federal appropriations for Amtrak since fiscal year 1988.)

In response to continually growing losses and a widening gap between
operating deficits and federal operating subsidies, Amtrak developed
its Strategic Business Plan.  This plan (which has been revised
several times) was designed to increase revenues and control cost
growth and, at the same time, eliminate Amtrak's need for federal
operating subsidies by 2002.  Amtrak also restructured its
organization into strategic business units:  the Northeast Corridor
Unit, which is responsible for operations on the East Coast between
Virginia and Vermont; Amtrak West, for operations on the West Coast;
and the Intercity Unit, for all other service, including most
long-distance, cross-country trains. 


   AMTRAK IS STILL IN FINANCIAL
   CRISIS
---------------------------------------------------------- Chapter 0:2

Amtrak is still in a financial crisis despite the fact that its
financial performance (as measured by net losses)\2 has improved over
the last 2 years.  At the end of fiscal year 1994, Amtrak's net loss
was about $1.1 billion (in 1996 dollars).  This loss was $873 million
if the one-time charge of $255 million--taken in fiscal year 1994 for
accounting changes, restructuring costs, and other items--is
excluded.\3 By the end of fiscal year 1996, this loss had declined to
about $764 million.  However, the relative gap between total revenues
and expenses has not significantly closed, and passenger revenues
(adjusted for inflation)--which Amtrak has been relying on to help
close the gap--have generally declined over the past several years
(see apps.  II and III). 

More importantly, the gap between operating deficits\4 and federal
operating subsidies has again begun to grow.  Amtrak continues to be
heavily dependent on federal operating subsidies to make ends meet. 
Although operating deficits have declined, they have not gone down at
the same rate as federal operating subsidies (see app.  IV).  At the
end of fiscal year 1994, the gap between Amtrak's operating deficit
and federal operating subsidies was $75 million.  At the end of
fiscal year 1996, the gap had increased to $82 million.  Over this
same time, federal operating subsidies went from $502.2 million to
$405 million.\5

Amtrak's continuing financial crisis can be seen in other measures as
well.  In February 1995, we reported that Amtrak's working
capital--the difference between current assets and current
liabilities--declined between fiscal year 1987 and fiscal year 1994. 
Although Amtrak's working capital position improved in fiscal year
1995, it declined again in fiscal year 1996 to a $195 million deficit
(see app.  V).  This decline reflects an increase in accounts
payable, short-term debt, and capital lease obligations, among other
items.  A continued decline in working capital jeopardizes Amtrak's
ability to pay immediate expenses.  Amtrak's debt levels have also
increased significantly (see app.  VI).  Between fiscal years 1993
and 1996, Amtrak's debt and capital lease obligations increased about
$460 million--from about $527 million to about $987 million (in 1996
dollars).  According to Amtrak, this increase was to finance the
delivery of new locomotives and Superliner and Viewliner cars--a
total of 28 locomotives and 245 cars delivered between fiscal years
1994 and 1996.  These debt levels do not include an additional $1
billion expected to be incurred to finance 18 high-speed trainsets
due to begin arriving in fiscal year 1999 and related maintenance
facilities for the Northeast Corridor (at about $800 million) and the
acquisition of 98 new locomotives (at about $250 million). 

It is important to note that Amtrak's increased debt levels could
limit the use of federal operating support to cover future operating
deficits.  As Amtrak's debt levels have increased, the interest
expenses that Amtrak has incurred on this debt have also increased
signficantly (see app.  VII).  In fact, over the last 4 years,
interest expenses have about tripled--from about $20.6 million in
fiscal year 1993 to about $60.2 million in fiscal year 1996.  This
increase has absorbed more of the federal operating subsidies each
year because Amtrak pays interest from federal operating assistance
and principal from federal capital grants.  Between fiscal year 1993
and fiscal year 1996, the percentage of federal operating subsidies
used to pay interest expenses has increased from about 6 to about 21
percent.  As Amtrak assumes more debt to acquire equipment, the
interest payments are likely to continue to consume an increasing
portion of the federal operating subsidies. 


--------------------
\2 As used here, net loss is calculated as total revenues minus total
expenses.  Unless otherwise noted, information on financial
performance and condition was provided by Amtrak and was not
independently verified. 

\3 Amounts stated in 1996 dollars. 

\4 As used here, operating deficit is the same as net loss except
that noncash items (such as depreciation) and the one-time charge
taken in fiscal year 1994 are excluded from total expenses. 

\5 Amounts include excess railroad retirement payments.  Amtrak is
required to participate in the railroad retirement and unemployment
systems.  Each participating railroad pays a portion of the costs for
all retirement and unemployment benefits in the industry.  Amtrak's
payments exceed its specific retirement and unemployment costs. 


   IMPLEMENTATION OF STRATEGIC
   BUSINESS PLANS HAS IMPROVED
   FINANCIAL PERFORMANCE, BUT NET
   LOSS TARGETS HAVE BEEN MISSED
---------------------------------------------------------- Chapter 0:3

Implementing the strategic business plans appears to have helped
Amtrak's financial performance--as evidenced by the reduction in net
losses between fiscal year 1994 and fiscal year 1996 (from about $873
million to about $764 million).\6 As we reported in July 1996, about
$170 million in cost reductions came in fiscal year 1995 by reducing
some routes and services, cutting management positions, and raising
fares.  Amtrak projected that these actions would reduce future net
losses by about $315 million annually once they were in place.  The
net loss was reduced in fiscal year 1996 as total revenues increased
more than total expenses did.  In contrast, Amtrak estimates that its
net loss in fiscal year 1996 would have been about $1.1 billion if no
actions had been taken to address its financial crisis in 1994. 

Although the strategic business plans have helped reduce the net
losses, targets for these losses have often been missed.  For
example, Amtrak's plans for fiscal years 1995 and 1996 included
actions to reduce the net losses by $195 million--from about $834
million in 1994 (in current year dollars) to $639 million in fiscal
year 1996.  This reduction was to be accomplished, in part, by
increasing revenues by $191 million while holding expenses at about
the 1994 level.  However, the actual net losses for this period
totaled about $1.572 billion, or about $127 million more than the
$1.445 billion Amtrak had planned.  This difference was primarily due
to the severe winter weather in fiscal year 1996--a contingency that
Amtrak had not planned for and one that added about $29 million to
expenses--and the unsuccessful implementation of various elements of
the fiscal year 1996 business plan.  For example, many of the
productivity improvements (such as reducing the size of train crews)
that Amtrak had planned in fiscal year 1996 were not achieved.  As a
result, cost savings fell short of Amtrak's $108 million target by
about $60 million. 

For fiscal year 1997, as a result of higher than anticipated losses
and an expected accounting adjustment, Amtrak planned for a net loss
of $726 million.  However, after the first quarter of operations,
revenues were below target, and although expenses were lower than
expected, the operating deficit was almost $4 million more than
planned for that quarter.  Through February 1997, the operating
deficit had increased to $8.5 million more than planned. 
Furthermore, the fiscal year 1997 financial results will be affected
by the postponement of route and service adjustments planned for
November 1996.  Amtrak estimates that postponing these adjustments
will bring a net revenue reduction of $6.9 million and a net cost
increase of $29.2 million.  Part of this increased cost will be
offset by an additional federal operating grant of $22.5 million made
to keep these routes operating.  In part, as a result of these
increased costs, Amtrak revised its planned fiscal year 1997 net loss
upward to $762 million from the originally projected $726 million. 
However, the loss could be even greater.  As a result of additional
unanticipated expenses and revenue shortfalls, at the end of the
first quarter Amtrak projected that its actual fiscal year 1997
year-end net loss could be about $786 million.  Second quarter
financial results are expected to be available in May 1997. 

Amtrak's projected fiscal year 1997 financial results may also affect
its cash flow and the need to borrow money to make ends meet.  For
example, in March 1997, Amtrak projected a cash flow deficit of about
$76 million at the end of fiscal year 1997--about $10 million more
than planned.  This deficit required Amtrak to begin borrowing in
March 1997 to pay its bills.  Moreover, the cash flow deficit may be
even larger than projected if Amtrak does not receive the revenues it
anticipates from the sale of property ($11 million) and the sale of
rights to use its rights-of-way to telecommunications companies ($45
million).  According to Amtrak, cost savings from lower electric
power prices in the Northeast Corridor--expected to yield $20.5
million in improved cash flow--has been delayed.  Amtrak's fiscal
year 1998 projected year-end cash balance is also bleak.  On the
basis of financial results through February 1997, Amtrak estimates
that it may have to borrow up to $128 million next year.  However,
Amtrak has recently testified before the Congress that it could run
out of cash during fiscal year 1998.  Amtrak currently has short-term
lines of credit of $150 million. 


--------------------
\6 As mentioned, the net loss for fiscal year 1994 excludes the
one-time charge of $255 million (in 1996 dollars).  Amounts are
stated in 1996 dollars. 


   AMTRAK CONTINUES TO HAVE
   SIGNIFICANT CAPITAL INVESTMENT
   NEEDS
---------------------------------------------------------- Chapter 0:4

Amtrak's need for capital funds remains high.  We reported in June
1996 that Amtrak will need billions of dollars to address its capital
needs, such as bringing the Northeast Corridor up to a state of good
repair.\7 This situation largely continues today.  In May 1996, the
Federal Railroad Administration (FRA) and Amtrak estimated that about
$2 billion would be needed over the next 3 to 5 years to recapitalize
the south end of the corridor and preserve its ability to operate in
the near term at existing service levels.  This renovation would
include making improvements in the North and East river tunnels
serving New York City and restoring the system that provides electric
power to the corridor.  This system, with equipment designed to last
40 to 50 years, is now between 60 and 80 years old, and, according to
FRA and Amtrak, has gotten to the point that it no longer allows
Amtrak and others to provide reliable high-speed and commuter
service.  FRA and Amtrak believe that this capital investment of
about $2 billion would help reverse the trend of adding time to
published schedules because of poor on-time performance.  Over the
next 20 years, FRA and Amtrak estimate up to $6.7 billion may be
needed to recapitalize the corridor and make improvements targeted to
respond to high-priority growth opportunities. 

A significant capital investment will be required for other projects
as well.  For example, additional capital assistance will be required
to introduce high-speed rail service between New York and Boston.  In
1992, the Amtrak Authorization and Development Act directed that a
plan be developed for regularly scheduled passenger rail service
between New York and Boston in 3 hours or less.  Currently, such
trips take, on average, about 4-1/2 hours.  Significant
rehabilitation of the existing infrastructure as well as
electrification of the line north of New Haven, Connecticut, will be
required to accomplish this goal.  According to Amtrak, since fiscal
year 1991 the federal government has invested about $900 million in
the high-speed rail program, and an additional $1.4 billion will be
required to complete the project.  A significant capital investment
will also be required to acquire new equipment and overhaul existing
equipment.  Amtrak plans to spend about $1.7 billion over the next 6
years for these purposes. 


--------------------
\7 See Northeast Rail Corridor:  Information on Users, Funding
Sources, and Expenditures, previously cited. 


   PROGRESS HAS BEEN SLOW IN
   ADDRESSING PREVIOUSLY REPORTED
   CAPITAL NEEDS
---------------------------------------------------------- Chapter 0:5

We reported in July 1996 and February 1995 on Amtrak's need for
capital investments and some of the problems being experienced as a
result.  We noted the additional costs of maintaining an aging fleet,
the backlogs and funding shortages that were plaguing Amtrak's
equipment overhaul program, and the need for substantial capital
improvements and modernization at maintenance and overhaul
facilities.  We also commented on the shrinking availability of
federal funds to meet new capital investment needs.  Our ongoing
work, the results of which we expect to report later this year, is
looking at these issues. 

The preliminary results of our work indicate that Amtrak has made
some progress in addressing capital needs, but the going has been
slow, and in some cases Amtrak may be facing significant future
costs.  For example, we reported in February 1995 that about 31
percent of Amtrak's passenger car fleet was beyond its useful
life--estimated at between 25 and 30 years--and that 23 percent of
the fleet was made up of Heritage cars (cars that Amtrak obtained in
1971 from other railroads) that averaged over 40 years old.  Since we
issued our report, the average age of the passenger car fleet has
declined from 22.4 years old (in fiscal year 1994) to 20.7 years old
(at the end of fiscal year 1996), and the number of Heritage cars has
declined from 437 to 246.  This drop is significant because Heritage
cars, as a result of their age, were subject to frequent failures,
and their downtime for repair was about 3 times longer than for other
types of cars.  However, these trends may be masking substantial
future costs to maintain the fleet.  In October 1996, about 53
percent of the cars in Amtrak's active fleet of 1,600 passenger cars
averaged 20 years old or more and were at or approaching the end of
their useful life (see app.  VIII).  It is safe to assume that as
this equipment continues to age, it will be subject to more frequent
failures and require more expensive repairs. 

Our ongoing work also shows that the portion of Amtrak's federal
capital grant available to replace assets has continued to shrink.\8
In February 1995, we reported that an increasing portion of the
capital grant was being devoted to debt service, overhauls of
existing equipment, and legally mandated uses, such as equipment
modifications and environmental cleanup.  In fiscal year 1994, only
about $54 million of Amtrak's federal capital grant of $195 million
was available to purchase new equipment and meet other capital
investment needs.  Since we issued our report, although the portion
of the capital grant available to meet general capital investment
needs increased in fiscal years 1995 and 1996, it shrank in fiscal
year 1997 (see app.  IX).  In fiscal year 1997, only $12 million of
the capital grant of $223 million is expected to be available for
general capital needs.  The rest will be devoted to debt service ($75
million), overhauls of existing equipment ($110 million), or legally
mandated work ($26 million).  It is likely that as Amtrak assumes
increased debt (including capital lease obligations) to acquire
equipment and as the number of cars in Amtrak's fleet that exceed
their useful life increases, even less of Amtrak's future capital
grants will be available to meet capital investment needs. 


--------------------
\8 The federal capital grants referred to in this discussion exclude
ones for the Northeast Corridor Improvement Program (NECIP) and the
high-speed rail program.  In fiscal years 1994 and 1997, Amtrak
received $225 million and $255 million, respectively, for these
programs. 


   ACHIEVING OPERATING
   SELF-SUFFICIENCY BY 2002 WILL
   BE DIFFICULT
---------------------------------------------------------- Chapter 0:6

Amtrak's ability to reach operating self-sufficiency by 2002 will be
difficult, given the environment within which it operates.  Amtrak is
relying heavily on capital investment to support its goal of
eliminating federal operating subsidies.  For example, Amtrak's draft
fiscal year 1997-2002 Strategic Capital Plan indicates that about 830
million dollars' worth of actions needed to close gaps in the
operating budget through 2002 is directly linked to capital
investments.  To support these actions, Amtrak anticipates
significantly increased federal capital assistance--about $750
million to $800 million per year.  In comparison, in fiscal year
1997, Amtrak received federal capital funding of $478 million.\9
Amtrak would like increased federal capital assistance to be provided
from a dedicated funding source, such as would be provided by the
bill you introduced Mr.  Chairman, S.  436 (the "Intercity Passenger
Rail Trust Fund Act of 1997").  That legislation would establish a
trust fund for intercity passenger rail and make available to Amtrak,
and states not receiving Amtrak service, revenue from a half cent per
gallon of the federal motor fuels tax through 2002.  This trust fund
would provide funding over the next 5 years to help Amtrak address
its capital needs. 

Amtrak is also subject to the competitive and economic environment
within which it operates.  We reported in February 1995 that
competitive pressures had limited Amtrak's ability to increase
revenues by raising fares.  Fares were constrained, in part, by lower
fares on airlines and intercity buses.  From fiscal year 1994 to
fiscal year 1996, Amtrak's yield (revenue per passenger mile)
increased about 24 percent, from 15.4 cents per passenger mile to
about 19.1 cents.  In comparison, between 1994 and 1995, airline
yields declined slightly, intercity bus yields increased 18 percent,
and the real price of unleaded regular gasoline increased a little
less than 1 percent.\10 However, it appears that Amtrak's ability to
increase revenues through fare increases has come at the expense of
ridership, the number of passenger miles, and the passenger miles per
seat-mile (load factor).  Between fiscal years 1994 and 1996, all
three declined.\11 Such trade-offs in the future could limit further
increases in Amtrak's yield and, ultimately, revenue growth. 

Finally, Amtrak will continue to find it difficult to take those
actions necessary to further reduce costs.  These include making the
route and service adjustments necessary to save money and to
collectively bargain cost-saving productivity improvements with its
employees.  During fiscal year 1995, Amtrak was successful in
reducing and eliminating some routes and services.  For example, on
seven routes Amtrak reduced the frequency of service from daily to 3
or 4 times per week, and on nine other routes various segments were
eliminated.  Amtrak estimates that such actions saved about $54
million.  Amtrak was less successful in making route and service
adjustments planned for fiscal year 1997 and estimates that its
failure to take these actions will increase its projected fiscal year
1997 loss by $13.5 million.  Amtrak has also been unsuccessful in
negotiating productivity improvements with labor unions.  Such
improvements were expected to save about $26 million in fiscal year
1995 and $19 million in fiscal year 1996. 


--------------------
\9 This amount includes the $255 million for NECIP and the high-speed
rail program. 

\10 Data for 1996 were not available for this analysis. 

\11 Between fiscal years 1994 and 1996, Amtrak's annual ridership
declined from 21.2 million to 19.7 million passengers, passenger
miles declined from 5.9 billion to 5.1 billion, and the load factor
declined from 49 to 46 percent.  Ridership excludes commuter
passengers. 


   CONCLUSIONS
---------------------------------------------------------- Chapter 0:7

Amtrak's financial future has been staked on the ability to eliminate
federal operating support by 2002 by increasing revenues, controlling
costs, and providing customers with high-quality service.  Although
the business plans have helped reduce net losses, Amtrak continues to
face significant challenges in accomplishing this goal, and it is
likely Amtrak will continue to require federal financial
support--both operating and capital--well into the future. 


-------------------------------------------------------- Chapter 0:7.1

Mr.  Chairman, this concludes my testimony.  I would be happy to
respond to any questions that you or Members of the Committee may
have. 


FEDERAL APPROPRIATIONS FOR AMTRAK,
FISCAL YEARS 1988-97
=========================================================== Appendix I



   (See figure in printed
   edition.)

Notes:  Mandatory payments to the Railroad Retirement Fund for fiscal
years 1988 through 1990 are estimated. 

The appropriations for fiscal year 1993 include $20 million in
supplemental operating funds and $25 million for capital
requirements.  The appropriations for fiscal year 1997 include $22.5
million in supplemental operating funds and $60 million for the
Northeast Corridor Improvement Program. 

For fiscal year 1997, an additional $80 million was appropriated to
Amtrak for high-speed rail. 

Source:  Amtrak


REVENUES AND EXPENSES, FISCAL
YEARS 1988-96
========================================================== Appendix II



   (See figure in printed
   edition.)

Note:  Amounts are in 1996 dollars. 

Source:  Amtrak. 


AMTRAK'S PASSENGER REVENUES,
FISCAL YEARS 1989-96
========================================================= Appendix III



   (See figure in printed
   edition.)

Note:  Amounts are in 1996 dollars. 

Source:  GAO's analysis of Amtrak's data. 


AMTRAK'S FEDERAL OPERATING SUBSIDY
AND MANDATORY PAYMENT COMPARED TO
THE OPERATING DEFICIT, FISCAL
YEARS 1988-96
========================================================== Appendix IV



   (See figure in printed
   edition.)

Notes:  Amtrak's operating deficit was calculated as total revenues
minus total expenses, excluding noncash expenses such as
depreciation. 

Amounts are in current year dollars. 

Source:  GAO's analysis of Amtrak's data. 


AMTRAK'S WORKING CAPITAL
SURPLUS/DEFICIT, FISCAL YEARS
1987-96
=========================================================== Appendix V



   (See figure in printed
   edition.)

Notes:  Working capital is the difference between current assets and
current liabilities. 

Amounts are in current year dollars.  In 1996 dollars, working
capital declined from $149 million in fiscal year 1987 to a deficit
of $195 million in fiscal year 1996. 

Source:  GAO's analysis of Amtrak's data. 


AMTRAK'S OUTSTANDING DEBT/CAPITAL
LEASE OBLIGATIONS, FISCAL YEARS
1987-96
========================================================== Appendix VI



   (See figure in printed
   edition.)

Note:  Amounts are in current year dollars. 

Source:  Amtrak. 


AMTRAK'S INTEREST EXPENSE, FISCAL
YEARS 1987-96
========================================================= Appendix VII



   (See figure in printed
   edition.)

Note:  Amounts are in current year dollars. 

Source:  Amtrak. 


AVERAGE AGE OF AMTRAK'S CAR FLEET,
OCTOBER 1996
======================================================== Appendix VIII



   (See figure in printed
   edition.)

Notes:  The data exclude mail-handling cars and road railers. 

The age of the baggage and autocarrier cars is a weighted average. 

Source:  GAO's analysis of Amtrak's data. 


COMMITMENTS OF AMTRAK'S FEDERAL
CAPITAL FUNDS, FISCAL YEARS
1989-97
========================================================== Appendix IX



   (See figure in printed
   edition.)

Notes:  The amount "available for other uses" is that portion of the
capital grant not already committed for specific requirements at the
beginning of the fiscal year.  This figure does not include capital
grants for the Northeast Corridor Improvement Program. 

Amounts for fiscal year 1997 are estimated. 

Source:  GAO's analysis of Amtrak's data. 


*** End of document. ***