Amtrak Report Refutes Press Release

A couple of weeks ago, I noted that, if Amtrak were a publicly traded company, it would have been guilty of securities fraud for misrepresenting its 2019 financial results in a press release before those results were officially published. Now Amtrak has published an unaudited edition of its 2019 returns and it verifies everything I said.

The document is the company’s monthly performance report for September, 2019, which also reports on year-to-date results. Since September 30 is the end of Amtrak’s fiscal year, this is in effect a preliminary annual report.

Page 3 of the report notes that Amtrak collected $2,288.5 million in ticket revenues, $143.9 million in food and beverage revenues, and $234.2 million in subsidies from the states. All of these are counted as “passenger related revenue.” Of course, subsidies from the states are not really passenger revenues, but they were portrayed that way in the press release.

Page 3 also lists expenses in two groups: one that includes such things as salaries and wages, train operations, fuel, and similar costs, while the second includes such things as the office of inspector general and depreciation. The press release reported that Amtrak lost only $29.8 million in 2019, but that only counts the first group of expenses. The inspector general, depreciation, and other costs were ignored.

Depreciation is the biggest of those costs at $868.2 million. After accounting for all of these costs (some of which, such as pensions and insurance proceeds, actually produced positive revenue), Amtrak admits its true net income was minus $874.8 million. The press release and other public statements by Amtrak officials pretend that depreciation doesn’t count.
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But that net income still counts state subsidies as revenue when in fact those subsidies were needed to cover up more losses. Correcting for this reduces Amtrak’s net revenue to minus $1,109.0 million, or $1.1 billion.

This doesn’t count capital spending, which is on page 4 and amounted to another $1.6 billion. Most of that was spent on capital replacement and maintenance, not true capital improvements likely to increase revenues. As a result, Amtrak’s true costs to taxpayers in 2019 were $2.7 billion, not the $29.3 million implied in the press release.

In Amtrak’s fantasy world, subsidies are passenger revenues; depreciation doesn’t count; and capital costs don’t count. In the real world, all of these claims are wrong.

If Amtrak really had lost just $29.3 million in 2019, I could hold out hope that passenger trains could earn a profit. But with losses of $2.7 billion, $1.1 billion of which was from operations, there is no way that Amtrak trains will ever earn a profit. Amtrak is deceiving the public when it claims that they will.