WASHINGTON— Amtrak is reviewing its expenses and may cut personnel and service to meet a congressional deadline for self-sufficiency.
Amtrak President George Warrington told employees in a memo he has ordered “an in-depth review of every aspect of the way in which we do business.”
The Washington Post reported Tuesday that Warrington has ordered a 15 percent cut in the railroad’s management ranks and may curtail service. Cuts of 10 percent to 15 percent in union employment also are being considered, the newspaper said.
Amtrak has hired a consulting firm, McKinsey & Co., to advise top management on how to restructure or redesign the passenger-train corporation.
Amtrak spokesman Bill Schulz said Tuesday that no decisions have been made about cuts in service or management. He said Amtrak “has been working aggressively over the last six months on scores of cost management initiatives ... designed to reduce costs by an average of $270 million annually.”
Amtrak’s operating loss of $944 million last year was the largest in its history.
Warrington alerted Amtrak’s 23,000 employees to the cost-cutting effort in an e-mail on Friday.
“I expect that many, many ideas for cost-cutting will be reviewed, with some implemented, some discarded, and others held onto as options,” he wrote.
He said a slowing economy is hurting Amtrak along with other segments of the travel industry.
“We are not meeting the forecasts we set before the economy took a downturn,” Warrington wrote. “So in this fiscal year, we’ve had to reduce expenses even more diligently in order to meet our financial targets.”
The 1997 Amtrak Reform and Accountability Act passed by Congress gave the national railway until 2003 to end its 30-year reliance on federal operating subsidies. Under the law, Amtrak would have to submit a plan for its own liquidation if it fails to meet the deadline.
More likely, a failure would reopen the debate about whether taxpayers should support a railroad that loses money but provides alternatives to crowded highways and airports.
Transportation Secretary Norman Y. Mineta, recently appointed by President Bush to Amtrak’s governing board, has suggested keeping only those routes that make money and abandoning the notion of a passenger rail system with nationwide reach.
Transportation Department Inspector General Kenneth Mead reported last month that Amtrak has taken on significant new debt in recent years to raise money for new business ventures while putting off needed investments to its core operations.
Last month, the railway revealed that it plans to mortgage parts of New York’s Pennsylvania Station to get $300 million to help maintain operations through September.
The Amtrak Reform Council, created by Congress to monitor Amtrak’s financial performance, recommended last year that the railway consider reductions in corporate overhead and staff.
The council’s executive director, Thomas Till, said Amtrak has hired 900 management-level employees in the last three to four years.
Warrington’s e-mail “confirms the council’s conclusion that fundamental reforms are needed,” said its chairman, Gil Carmichael.
The council has proposed dividing Amtrak’s responsibilities into a profit-focused company responsible for train operations, a separate government-owned corporation to oversee assets like tracks and stations, and a new government oversight agency.
On the Net:
Amtrak Reform Council: http://www.amtrakreformcouncil.gov