Welcome to the latest episode of our ongoing "Pigs At The Trough" series, documenting how companies who have taken zero financial precautions over the last decade are now rushing to Uncle Sam and the American taxpayer for their "do-overs".
Next up on the list is Amtrak, who is now apparently banking on a $1 billion bailout, according to the Wall Street Journal.
Like other major businesses, everybody staying home has had a profoundly and disproportionately negative affect on Amtrak, which has seen its ridership plummet. And it apparently comes just before the railroad was going to eek out a profit for the first time in its 50 year history.
That's a shame. Perhaps the company should have focused on turning a profit at some point over the last 5 decades a little quicker?
But we digress. Bookings on the company's Acela have fallen 99% through the end of last week as total ridership has fallen 92% across the national railroad system.
CEO Richard Anderson said: “There’s really no one riding the Acela. There’s no point operating empty trains.”
High speed service between Boston and Washington has been shut down, along with 40% of the railroad's capacity on the Northeast Corridor. The company is running just 14 trains per day on the Northeast Corridor.
Anderson said on Friday the company needs $1 billion in addition to its annual operating subsidy and that the company is now projecting an $840 million loss for the year ending September 30. That loss will come despite expense reductions of $110 million to $150 million.
Those expense cuts include corporate matching of 401(k) contributions being suspended and the top three bands of management taking pay cuts of 20% or more. Workers are also being asked to take voluntary unpaid leave, as layoffs inevitably loom.
Anderson said: “It’s as dramatic a falloff as you’d see in any business. So we are working very hard to make up $1 billion in cash right now.”
Mark Kenny, the general chairman of the union representing Amtrak engineers said: “We are still a long way from getting back to any degree of normalcy, and things are very likely to deteriorate further before getting better.”
The company is reportedly working with congress to deal with an ”unprecedented reduction in demand and ridership, our ongoing service adjustments and our future financial needs so that we come out of this crisis ready to continue serving the nation.”
A bill making its way through congress right now includes $1.018 billion for Amtrak.
Amtrak spokeswoman Christina Leeds said: “Additionally, it is vital that we continue to advance capital projects that are critical to the safety and long-term operation of passenger rail.”
Meanwhile, DJ Stadtler, the railroad’s chief administrative officer told employees last week: “Amtrak doesn’t have the funding to cover pay and benefits for almost 19,000 employees for an indefinite period of time, during a crisis that is going to cause the company to lose hundreds of millions of dollars. It doesn’t feel good to say that, but this is the hard reality that we and most other employers are facing now. “