Amtrak warned Monday it needs a $1.475 billion bailout from the federal government to maintain "minimum service levels," anticipating passenger volumes will be depressed through 2021, reported The Washington Post.
Amtrak chief executive William J. Flynn wrote a letter to Congress explaining how the economic fallout has devastated the passenger railroad service that provides medium and long-distance intercity travel across the country.
"It is clear that Amtrak faces daunting challenges in the Fiscal Year 2021, which will require us to take action to protect our rail network, our critical capital assets, and the livelihoods of our employees," Flynn said in the letter dated Monday.
"While we work towards a full recovery one day, our current projections tell us that we expect to see ridership drop by approximately 50%, down to just over 16 million riders in FY 2021," Flynn said in the letter.
Amtrak's request for $1.475 billion is for the fiscal year that begins in October is an addition to its annual $2 billion federal grant.
The railroad plans to slash operating expenses by approximately $500 million to weather the downturn. Congress has already given it $1 billion in emergency funding to keep the railroad running. At the moment, ridership and revenue levels have collapsed by 95% since the virus outbreak began.
In a letter to employees, first seen by Reuters, Flynn said, "it is clear we have no choice but to reduce our overhead structure to better align our costs with our revenues."
"This reduction is necessary to ensure we have a sustainable Amtrak that can continue to make critical investments in our core and long-term growth strategies, while also keeping safety as our top priority."
Reuters notes planned cuts could be upwards of 20% of its workforce in the coming fiscal year.
Amtrak expects revenues on a full-year basis to plunge 50%. It also expects ridership to drop from 32 million in 2019 to 16 million in 2021. Even with emergency funding, Amtrak is expected to cut some of its services.
Passenger rail is essential to America's economic development. The most heavily traveled portion of Amtrak's rail system is the Northeast Corridor, which stretches from Washington, DC, to Baltimore to New York to Boston.
Northeast states contribute around 20% of US GDP, which all suggests if passenger rail activity has collapsed -- the real economy will likely remain depressed this year and into next. Hopes for a V-shaped recovery are quickly fading...