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.
The passenger carrier said the rule changes are consistent with a recent executive order for federal employees.
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