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Quarterly Report on Amtrak's FY 2008 Operational Reforms Savings and Financial Performance

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On April 30th, as mandated by the fiscal year 2008 Appropriations Act for the Department of Transportation, we issued our quarterly report on Amtrak’s year–to–date financial performance and savings from operational reforms to the House and Senate Appropriations Committee. Amtrak performed better than it expected financially through February. Amtrak’s cash operating loss through February was $158 million, $73 million better than planned and reflects $3.2 million in operational reform savings. Amtrak underestimated its Acela revenues and overestimated its benefits costs. Based on performance thru February, Amtrak now projects to end the year with cash operating loss of $444.3 million and a cash balance of $286.1 million. Overall, we believe Amtrak may achieve $13.8 million in operational reform savings. Our FY 2008 operating reform savings target is a subset of Amtrak’s $40 million target because we did not consider $26 million of Amtrak’s savings to be sustainable reforms. Amtrak’s focus is now on overall budget performance, not implementing sustainable operating reforms. As a result, short–term cost avoidance or unsustainable favorable financial performance from factors beyond Amtrak’s control could take the place of sustainable operating reforms. Amtrak’s current strategic plan does not include specifics on how it would achieve its broad financial and operating goals, thereby making its reform priorities unclear. Amtrak’s new strategic plan, currently being developed, will provide an opportunity for Amtrak to indicate more clearly its reform priorities.