The National Railroad Passenger Corporation, doing business as Amtrak (reporting mark AMTK), is a government-owned corporation that was organized on May 1, 1971, to provide intercity passenger train service in the United States. "Amtrak" is a portmanteau of the words "America" and "track".[1] It is headquartered at Union Station in Washington, D.C.[2]
All of Amtrak's preferred stock is owned by the U.S. federal government. The members of its board of directors are appointed by the President of the United States and are subject to confirmation by the United States Senate. Common stock was issued in 1971 to railroads that contributed capital and equipment; these shares convey almost no benefits[3] but their current holders[4] declined a 2002 buy-out offer by Amtrak.[5]
Amtrak employs nearly 19,000 people. It operates passenger service on 21,000 miles (34,000 km) of track primarily owned by freight railroads connecting 500 destinations in 46 states[6] and three Canadian provinces. In fiscal year 2008, Amtrak served 28.7 million passengers, representing six straight years of record ridership.[6][7] Despite this recent growth, the United States still has one of the lowest inter-city rail usages in the developed world.
In 1981, Congress told Amtrak to make better use of all its resources to minimize federal support. In addition to revenues from the commuter and 403(b) trains, by 1981, Amtrak's real estate revenues were generating about $9 million a year. In 1984 the company acquired the remaining one-half interest in Chicago Union Station.
To help increase its assets, the company established a corporate development department. One of its ventures was to lease the NEC right-of-way to telecommunication companies for installing fiber optics communications systems. MCI Communications was the first company to enter into such a lease, with MCI providing Amtrak with specific fibers and communication circuits as well as with cash. Amtrak used those high capacity circuits for their own network and marketed and leased them to large telecommunication users. Amtrak also turned to mail and express freight service for additional income.
In 1985, Amtrak's supporters argued that shutting down Amtrak completely would result in costly drops in productivity due to traffic jams and crowded airports in the major corridors, especially in the northeast. The prospect of more cars and planes (and the resulting pollution) effectively dampened enthusiasm for eliminating all support for Amtrak, at least for a while.
In 1986, Amtrak became the dominant carrier between New York and Washington, with 38 percent of the total air-rail market. In 1989, the company began another period of capital investment, as Amtrak purchased 104 short-distance passenger cars to alleviate crowding on routes in the Midwest and in California's San Joaquin Valley.
By the end of the decade, Amtrak operations were bringing in more than $1.2 billion in revenues. But with operating expenses in fiscal 1989 of nearly $2 billion, it continued to have an operating loss larger than the $554 million operating grant it received from the federal government. The general capital grant fell from $221 million in fiscal year 1981 to $2 million in fiscal 1986 then averaged $34 million for the rest of the decade.
1990s: Moving Toward Self-Sufficiency
In 1994, Congress and the Clinton Administration demanded that Amtrak operations become self-sufficient by 2002. To accomplish this, the company, under new CEO Thomas Downs, adopted a strategic and business plan for the period 1995 to 2000. As part of the plan, Amtrak decentralized itself into three business units to increase accountability and responsiveness: Northeast Corridor, covering services from Virginia to New England; Amtrak West, which operated state-supported corridor trains and the long-distance Coast Starlight on the West Coast; and Amtrak Intercity, responsible for most of the long-distance routes as well as corridor trains in the Midwest. The company also began raising fares, cutting routes and service, and implementing cost reduction programs for its operations.
However, Amtrak needed new rolling stock to replace old equipment, to achieve better travel times, and to meet the requests from states for new intrastate rail services. Through 1990, Amtrak had spent $1.6 billion for cars and locomotives and the capital investment continued during the decade with the delivery of new diesel locomotives, 195 bi-level Superliners, and, in 1996, 50 Viewliners, the first single-level sleeping cars made in the United States in 40 years. In California, 14 new dual-level dining cars were introduced on the state-supported routes, and in Washington, three pendular "tilt" Talgo trains were ordered by Amtrak and the Washington Department of Transportation for delivery in 1998. Trains able to travel 150 miles an hour were added to service the Northeast Corridor beginning in 1999.
Although revenues increased to $1.6 billion in fiscal year 1996, debt and capital lease obligations were almost $1 billion. By 1997, Amtrak was in danger of going bankrupt (in December of that year Downs resigned as CEO and a search was underway for his successor). Congress debated the company's request to designate one-half cent of the Interstate Highway Trust for capital expenditures, but instead passed a tax rebate package of $2.3 billion for Amtrak capital spending over two years and adopted a package of reforms changing various labor requirements, allowing Amtrak to alter the basic system of routes inherited in 1971, setting a cap on liability costs, and establishing a new Reform Board. Funding for the Department of Transportation for fiscal year 1998 included $344 million for Amtrak operations and $250 million for Northeast Corridor capital. It also included $23 billion for highways, $9 billion for aviation, and $4 billion for transit.
Growing Budgets and High Speed Service in the 2000s
Despite the shakeup at the top and numerous skeptics, Amtrak survived. The company continued its efforts to improve service, spending $26.6 million to overhaul 212 passenger cars. Buttressed by the Taxpayer Relief Act of 1997 Amtrak launched a $360 million capital improvement program. They spent $100 million for eight new five-car train sets for San Diego service, purchased eight locomotives, 64 carriers, 43 coaches, several improved refrigerator cars, and numerous expensive equipment updates. New lines and improved travel times resulted in several cities. In December 1998 Amtrak agreed to purchase 44 RoadRailer Mailvans. Acting President and CEO George D. Warrington cited increasing rail revenues--which had been rising 10 percent each year--as reason for the investment, which he stated could only bolster their bottom line.
In January 1999 the Department of Transportation released a report accusing Amtrak of underreporting its losses, stating specifically that the 1998 year's loss was not the reported $95 million, but $854 million. A brief flap followed, but some in Congress pointed out that it was difficult for Amtrak to succeed when expectations for them constantly changed. Warrington continued to assemble a new management team, envisioning an Amtrak that featured high speed rail corridors across the country and high-quality service. Statistics backed up Warrington's assertions that Amtrak continued to improve--between 1998 and 1999 the percent of riders was the highest it had been in a decade, on-time arrival was the highest it had been in 13 years, and passenger revenues had topped $1 billion for the first time.
In March 2000 Amtrak introduced the Acela Regional passenger service, creating the long-awaited electrification of the Northeast Corridor linking Boston, New York, and Washington, D.C. The result was a reduction in travel time from Boston and New York by up to 90 minutes. Further improvements were unveiled in November 2000, after months of delay. The Acela Express, the nation's first high-speed rail system began travelling the Northwest Corridor's tracks at up to 150 miles per hour, reducing a Boston to New York trip to 3 hours and 15 minutes, a New York to Washington, D.C. trip to 2 hours and 28 minutes. The Acela beat its projected profits by 12 percent in the first quarter of 2001 and launched Amtrak into its most profitable year yet. The success prompted Congress to reconsider a controversial bill to allow Amtrak to issue bonds to raise $12 million dollars for the high-speed rail system.
Rail use rose significantly due to security concerns in the wake of the terrorist attacks of September 11, 2001, and Congress allocated over a billion dollars to improve Amtrak's security. Yet Congress had legislated a time bomb for Amtrak in 1997 that was set to go off by December 2002. Amtrak was to attain self-sufficiency by that December or prepare for liquidation. By December 2001, CEO Warrington was told by the federally appointed Amtrak Reform Council that he would have to prepare a liquidation plan. Amtrak was absolved of the responsibility to prepare its own liquidation plan by a defense act signed into law by President Bush in early 2002, but was told they still needed to attain self-sufficiency. Numerous ideas were floated by congressional agencies, including breaking Amtrak up into separate privatized industries.
In July 2003 two competing funding plans warred for prominence. The Bush administration announced that it would allocate $90 million, while a house committee approved a bill that would fund the company for $6 billion over the next three years. Congressional debate continued, with Senator John McCain and the Bush administration arguing for breaking Amtrak up and selling it. They faced stiff opposition from both Democrats and other Republican congressional leaders. By February 2004 the Amtrak supporters had won, and Amtrak was approved for $2 billion a year for six years.
Amtrak had won at least a reprieve. By the fall of 2004 it looked as though the company would remain intact, though it still faced significant hurdles. Throughout its history it was funded at a rate tens of times lower than the rate at which Congress has funded highways and aviation, and continued to own little of its own track. Still, with the new high-speed trains, rising passenger rates, and improved funding, the future looked, if not rosy, then far more promising than it had in many years.
Principal Competitors: Greyhound Lines Inc.
Key Dates:
1971: The National Railroad Passenger Corporation is created by an Act of Congress to supervise the country's rail passenger train service.
1981: Congress petitions Amtrak to cut back on federal support dollars.
1983: Amtrak shifts from a supervisory to an ownership role of the rail services, employing crews and centralizing reservations.
1994: Given the company's impressive revenues, Congress demands that Amtrak become a self-sufficient corporation.
1997: On the verge of bankruptcy, Amtrak continues to rely on federal subsidies.
2000: Amtrak debuts the Acela Regional passenger service linking Boston, New York, and Washington, D.C.
2004: Amtrak avoids insolvency, being approved for $2 billion a year in assistance for six years.
Statistics:
Private Company
Founded: 1971
Employees: 22,000
Sales: $2.07 billion (2003)
NAIC: 482110 Rail Transportation
Address:
80 Massachusetts Avenue N.E.
Washington, D.C. 20002
U.S.A.
All of Amtrak's preferred stock is owned by the U.S. federal government. The members of its board of directors are appointed by the President of the United States and are subject to confirmation by the United States Senate. Common stock was issued in 1971 to railroads that contributed capital and equipment; these shares convey almost no benefits[3] but their current holders[4] declined a 2002 buy-out offer by Amtrak.[5]
Amtrak employs nearly 19,000 people. It operates passenger service on 21,000 miles (34,000 km) of track primarily owned by freight railroads connecting 500 destinations in 46 states[6] and three Canadian provinces. In fiscal year 2008, Amtrak served 28.7 million passengers, representing six straight years of record ridership.[6][7] Despite this recent growth, the United States still has one of the lowest inter-city rail usages in the developed world.
In 1981, Congress told Amtrak to make better use of all its resources to minimize federal support. In addition to revenues from the commuter and 403(b) trains, by 1981, Amtrak's real estate revenues were generating about $9 million a year. In 1984 the company acquired the remaining one-half interest in Chicago Union Station.
To help increase its assets, the company established a corporate development department. One of its ventures was to lease the NEC right-of-way to telecommunication companies for installing fiber optics communications systems. MCI Communications was the first company to enter into such a lease, with MCI providing Amtrak with specific fibers and communication circuits as well as with cash. Amtrak used those high capacity circuits for their own network and marketed and leased them to large telecommunication users. Amtrak also turned to mail and express freight service for additional income.
In 1985, Amtrak's supporters argued that shutting down Amtrak completely would result in costly drops in productivity due to traffic jams and crowded airports in the major corridors, especially in the northeast. The prospect of more cars and planes (and the resulting pollution) effectively dampened enthusiasm for eliminating all support for Amtrak, at least for a while.
In 1986, Amtrak became the dominant carrier between New York and Washington, with 38 percent of the total air-rail market. In 1989, the company began another period of capital investment, as Amtrak purchased 104 short-distance passenger cars to alleviate crowding on routes in the Midwest and in California's San Joaquin Valley.
By the end of the decade, Amtrak operations were bringing in more than $1.2 billion in revenues. But with operating expenses in fiscal 1989 of nearly $2 billion, it continued to have an operating loss larger than the $554 million operating grant it received from the federal government. The general capital grant fell from $221 million in fiscal year 1981 to $2 million in fiscal 1986 then averaged $34 million for the rest of the decade.
1990s: Moving Toward Self-Sufficiency
In 1994, Congress and the Clinton Administration demanded that Amtrak operations become self-sufficient by 2002. To accomplish this, the company, under new CEO Thomas Downs, adopted a strategic and business plan for the period 1995 to 2000. As part of the plan, Amtrak decentralized itself into three business units to increase accountability and responsiveness: Northeast Corridor, covering services from Virginia to New England; Amtrak West, which operated state-supported corridor trains and the long-distance Coast Starlight on the West Coast; and Amtrak Intercity, responsible for most of the long-distance routes as well as corridor trains in the Midwest. The company also began raising fares, cutting routes and service, and implementing cost reduction programs for its operations.
However, Amtrak needed new rolling stock to replace old equipment, to achieve better travel times, and to meet the requests from states for new intrastate rail services. Through 1990, Amtrak had spent $1.6 billion for cars and locomotives and the capital investment continued during the decade with the delivery of new diesel locomotives, 195 bi-level Superliners, and, in 1996, 50 Viewliners, the first single-level sleeping cars made in the United States in 40 years. In California, 14 new dual-level dining cars were introduced on the state-supported routes, and in Washington, three pendular "tilt" Talgo trains were ordered by Amtrak and the Washington Department of Transportation for delivery in 1998. Trains able to travel 150 miles an hour were added to service the Northeast Corridor beginning in 1999.
Although revenues increased to $1.6 billion in fiscal year 1996, debt and capital lease obligations were almost $1 billion. By 1997, Amtrak was in danger of going bankrupt (in December of that year Downs resigned as CEO and a search was underway for his successor). Congress debated the company's request to designate one-half cent of the Interstate Highway Trust for capital expenditures, but instead passed a tax rebate package of $2.3 billion for Amtrak capital spending over two years and adopted a package of reforms changing various labor requirements, allowing Amtrak to alter the basic system of routes inherited in 1971, setting a cap on liability costs, and establishing a new Reform Board. Funding for the Department of Transportation for fiscal year 1998 included $344 million for Amtrak operations and $250 million for Northeast Corridor capital. It also included $23 billion for highways, $9 billion for aviation, and $4 billion for transit.
Growing Budgets and High Speed Service in the 2000s
Despite the shakeup at the top and numerous skeptics, Amtrak survived. The company continued its efforts to improve service, spending $26.6 million to overhaul 212 passenger cars. Buttressed by the Taxpayer Relief Act of 1997 Amtrak launched a $360 million capital improvement program. They spent $100 million for eight new five-car train sets for San Diego service, purchased eight locomotives, 64 carriers, 43 coaches, several improved refrigerator cars, and numerous expensive equipment updates. New lines and improved travel times resulted in several cities. In December 1998 Amtrak agreed to purchase 44 RoadRailer Mailvans. Acting President and CEO George D. Warrington cited increasing rail revenues--which had been rising 10 percent each year--as reason for the investment, which he stated could only bolster their bottom line.
In January 1999 the Department of Transportation released a report accusing Amtrak of underreporting its losses, stating specifically that the 1998 year's loss was not the reported $95 million, but $854 million. A brief flap followed, but some in Congress pointed out that it was difficult for Amtrak to succeed when expectations for them constantly changed. Warrington continued to assemble a new management team, envisioning an Amtrak that featured high speed rail corridors across the country and high-quality service. Statistics backed up Warrington's assertions that Amtrak continued to improve--between 1998 and 1999 the percent of riders was the highest it had been in a decade, on-time arrival was the highest it had been in 13 years, and passenger revenues had topped $1 billion for the first time.
In March 2000 Amtrak introduced the Acela Regional passenger service, creating the long-awaited electrification of the Northeast Corridor linking Boston, New York, and Washington, D.C. The result was a reduction in travel time from Boston and New York by up to 90 minutes. Further improvements were unveiled in November 2000, after months of delay. The Acela Express, the nation's first high-speed rail system began travelling the Northwest Corridor's tracks at up to 150 miles per hour, reducing a Boston to New York trip to 3 hours and 15 minutes, a New York to Washington, D.C. trip to 2 hours and 28 minutes. The Acela beat its projected profits by 12 percent in the first quarter of 2001 and launched Amtrak into its most profitable year yet. The success prompted Congress to reconsider a controversial bill to allow Amtrak to issue bonds to raise $12 million dollars for the high-speed rail system.
Rail use rose significantly due to security concerns in the wake of the terrorist attacks of September 11, 2001, and Congress allocated over a billion dollars to improve Amtrak's security. Yet Congress had legislated a time bomb for Amtrak in 1997 that was set to go off by December 2002. Amtrak was to attain self-sufficiency by that December or prepare for liquidation. By December 2001, CEO Warrington was told by the federally appointed Amtrak Reform Council that he would have to prepare a liquidation plan. Amtrak was absolved of the responsibility to prepare its own liquidation plan by a defense act signed into law by President Bush in early 2002, but was told they still needed to attain self-sufficiency. Numerous ideas were floated by congressional agencies, including breaking Amtrak up into separate privatized industries.
In July 2003 two competing funding plans warred for prominence. The Bush administration announced that it would allocate $90 million, while a house committee approved a bill that would fund the company for $6 billion over the next three years. Congressional debate continued, with Senator John McCain and the Bush administration arguing for breaking Amtrak up and selling it. They faced stiff opposition from both Democrats and other Republican congressional leaders. By February 2004 the Amtrak supporters had won, and Amtrak was approved for $2 billion a year for six years.
Amtrak had won at least a reprieve. By the fall of 2004 it looked as though the company would remain intact, though it still faced significant hurdles. Throughout its history it was funded at a rate tens of times lower than the rate at which Congress has funded highways and aviation, and continued to own little of its own track. Still, with the new high-speed trains, rising passenger rates, and improved funding, the future looked, if not rosy, then far more promising than it had in many years.
Principal Competitors: Greyhound Lines Inc.
Key Dates:
1971: The National Railroad Passenger Corporation is created by an Act of Congress to supervise the country's rail passenger train service.
1981: Congress petitions Amtrak to cut back on federal support dollars.
1983: Amtrak shifts from a supervisory to an ownership role of the rail services, employing crews and centralizing reservations.
1994: Given the company's impressive revenues, Congress demands that Amtrak become a self-sufficient corporation.
1997: On the verge of bankruptcy, Amtrak continues to rely on federal subsidies.
2000: Amtrak debuts the Acela Regional passenger service linking Boston, New York, and Washington, D.C.
2004: Amtrak avoids insolvency, being approved for $2 billion a year in assistance for six years.
Statistics:
Private Company
Founded: 1971
Employees: 22,000
Sales: $2.07 billion (2003)
NAIC: 482110 Rail Transportation
Address:
80 Massachusetts Avenue N.E.
Washington, D.C. 20002
U.S.A.