Amtrak said over the weekend that it is taking what it termed aggressive steps in the wake of the COVID-19 pandemic, including reducing the salaries of its top executives.
For now Amtrak CEO Richard Anderson said Amtrak will not lay off employees.
An internal memo sent by Amtrak Senior Vice President Stephen Gardner said incoming President William Flynn will not draw his Amtrak salary during the crisis.
Gardner said Amtrak faces a loss of $1 billion due to plunging bookings and widespread cancellations of existing reservations.
The intercity passenger carrier has asked the federal government for a supplemental appropriation to cover lost revenue.
The pay cuts will take effect April 1. Flynn is scheduled to replace Anderson in the CEO chair on April 15.
Amtrak will suspend its its 401(k) matching contribution for management employees through the end of the calendar year.
“We recognize these actions have a serious impact on our employees and their families,” Gardner said in the memo. “But we are taking this action to help protect everyone. We appreciate your support as we work our way through this crisis together.”
Other measures being taken by Amtrak include ending all non-safety-critical hiring; cutting discretionary travel, professional fees, and advertising spending; and deferring non-priority capital expenses.
In a dial-in town hall meeting for Amtrak workers held on Friday, Anderson said the carrier is seeking to avoid involuntary furloughs.
The carrier will meet a commitment in current labor agreements granting employees a 3.5 percent pay increase on July 1, but Anderson called for union leaders to consider delaying but not cancelling the increase until Amtrak ridership recovers.
Anderson hinted that if the unions balk at delaying the pay raise the carrier might revoke its non-layoff stance.
“General chairmen need to get engaged and figure out how to do this if we are to avoid an involuntary furlough, given that we don’t have any business anymore,” Anderson said.
“We have been through a lot of tough times with Amtrak—from host railroads that want to put us out of business, to presidents who don’t want to fund us, to [a] Congress that doesn’t always want to properly fund us, and to states and private companies that would like to take over our services,” Anderson said.
He said Acela ridership in the Northeast Corridor has fallen by 92 percent, Acela reservations are down by 99 percent and bookings for long-distance trains have declined by 64 percent.
Anderson expects those numbers to worsen as additional government imposed restrictions are placed on personal mobility.
“On 9/11, we knew specifically what the root cause of the problem was at the time, [and] the transportation system recovered fairly quickly,” Anderson said. “In this instance, we don’t have clear direction of what the end point of the coronavirus is.”
Amtrak has more than $3 billion of cash on hand but Anderson said the carrier must continue to pay operating expenses and pay interest on its existing loans.
It has halted spending on capital projects except those needed to keeping trains moving.
“By any measure, the economy is in recession,” Anderson said. “We can’t just count on Congress to close our gap.”
Saying there is no reason to operate empty trains, Anderson said Northeast Corridor service has been cut by 40 percent and 10 routes have reduced service with more service cuts coming.
Although the long-distance network will remain intact, Anderson said 40 percent of its seat capacity has been removed in the form of operating fewer rail cars.
“We need to be aggressive in preserving our cash,” Anderson said.
“I’m certain that the long-distance network will be very different longer term,” he said. “Over the past three or four years, it has taken more than $2.5 billion of federal money to keep the long-distance network operating, and if we don’t have the subsidy from the Northeast Corridor and state [supported corridor] trains bearing their share of the national network, the loss gets that much bigger.”
Anderson acknowledged that the steps Amtrak has taken are “demoralizing,” but said it would be be more demoralizing to tell people they don’t have a job anymore.
“That’s what we are working to avoid. If we just stood here and didn’t do anything, and one day in July or August we told everybody that the company was near liquidation and that we were going to lay off 10,000 or 15,000 people, that would be far more demoralizing. That would be irresponsible,” Anderson said.
In the meantime, Amtrak announced it will suspend all Acela Express service in the Northeast Corridor on Monday.
Northeast Corridor service will be covered by a schedule of Northeast Regional trains operating at 40 percent of the regular weekday schedule.
Until now Amtrak had suspended only a small number of Acela Express trains.
Acela service carried 3.5 million in 2019 of the 12.5 million ridership in the Northeast Corridor.
Other service cuts today are set to be implemented in California and North Carolina.
akronrrclub.wordpress.com 
Flynn’s Success Will Hinge on His Political Skills
March 2, 2020It remains to be seen what, if any, changes will result from the installation of William Flynn as Amtrak’s next president and CEO next month.
No doubt some rail passenger advocates are happy to see Richard Anderson leave although he’ll continue as an adviser to Flynn through the end of the year.
Anderson at times showed an abrasive personality that made him a lightning rod of criticism.
Perhaps that was what the Amtrak board of directors thought was needed in 2018 but it may have decided that in 2020 a kinder, gentler CEO is needed.
The news release announcing Flynn’s hiring contained the type of laudatory language that is standard in public relations products announcing personnel changes.
There were a lot of words that didn’t say much of substance.
It gave little indication about what role Flynn sees for Amtrak as a transportation provider.
The release tried to portray Flynn’s hiring as a planned succession although that might be boilerplate language that means little.
Anderson’s leaving had been foreshadowed in a Wall Street Journal article earlier this year yet the Amtrak board of directors had not given any public signals that Anderson’s departure was imminent.
Nor has the Amtrak board in public expressed any concerns or discontent with how Anderson has managed the passenger carrier.
The news release and a statement sent to Amtrak employees were filled with the type of self-congratulatory statements about how ridership is up and finances have improved.
Amtrak has hinted at breaking even this year on an operating basis which should be not confused with making a profit, something that has never happened in the company’s 48-year history.
More than likely Flynn was hired because of his executive experience rather than his views of the role of rail passenger service in the United States.
If asked, he’ll say all the right things about how the future of rail service is bright.
But I would be surprised if Flynn’s hiring means that certain things that have been lost during the Anderson regime, such as full service dining cars on the Capitol Limited and Lake Shore Limited, will make a comeback.
Don’t expect the new rules Amtrak just implemented to make it tougher to get refunds or change your travel plans to go away.
Private car owners and those wishing to charter an Amtrak train probably won’t see significant changes in Amtrak rules and policies.
In short, I don’t look for Flynn to herald the second coming of W. Graham Claytor Jr.
It may be that Amtrak’s directors decided Anderson had become too toxic on Capitol Hill to win the type of budgetary and policy victories that Amtrak is eyeing.
The passenger carrier has an ambitious legislative agenda that is tied in with a new surface transportation bill that Congress needs to pass to replace the one that expires on Sept. 30.
Among other things, Amtrak wants funding to establish new corridor-oriented services, laws that would gives it a stronger position when talking with his host railroads about on-time performance, and capital funding for new equipment and infrastructure.
There had been speculation earlier that Anderson’s replacement would be current Amtrak senior vice president Stephen Gardner.
Instead, Amtrak’s board hired another airline executive. Flynn has four decades of transportation industry experience but it is worth noting that he has spent his career in the private sector.
Such Amtrak heads as David Gunn and Joseph Boardman had experience in the public sector.
Amtrak may on paper be akin to a private company, but given its reliance on public funding it has much in common with a non-profit agency even if it tries to operate like a private company.
Ultimately, what is important is that Amtrak’s CEO understands not just how railroads operate but how to play the political games inherent in being an entity that has two boards of directors – the one that hired you and the members of Congress who control your funding and so much about the environment in which your company operates.
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