What skills can an airline CEO bring to Amtrak for a turnaround and/or change?
WEEK 5 WSJ
Amtrak Has Lost Money for
Decades. A Former Airline CEO
Thinks He Can Fix It.
Onetime Delta CEO Richard Anderson has nearly
eliminated the railroad’s operating losses, but some
train fanatics are fuming about the changes
By Ted Mann July 6, 2019 12:01 am ET
The signs are aimed at the thousands of train passengers who rumble each day
through North Philadelphia—two banners 14 feet high by 26 feet wide, mounted
outside an old package-sorting facility built in the heyday of the Pennsylvania
Railroad.
“SAVE AMTRAK,” one says. The other: “FIRE ANDERSON.”
No one has stirred up the people who feel deeply about the national passenger
railroad—long-haul train fanatics, safety regulators, union employees, private
railcar owners—quite like Richard Anderson, the former Delta Air Lines Inc. boss
who took over as Amtrak’s chief executive in 2017.
“He’s trying to run it like an airline,” said Jack Dinsdale, a railroad union official.
He has tangled with Amtrak management over cost cuts that closed call centers
and slashed staffing and hot-meal service on long-distance routes.
Mr. Anderson, 64 years old, didn’t shrink from many fights in his years running
Delta and Northwest Airlines. And after two years of a sometimes uncomfortable
overhaul, he is unapologetic about his efforts to force Amtrak to change. Among
the most contentious proposals is altering or eliminating some of the network’s
venerable long-distance train routes in favor of more frequent service where the
population is growing.
It was a train buff, a former Philadelphia city official named Bennett Levin, who
hung the “FIRE ANDERSON” signs outside the old Pennsylvania Railroad
freight-sorting facility where Mr. Levin keeps a stable of lovingly restored antique
train cars. Hobbyists are miffed by Mr. Anderson’s moves to limit their ability to
attach private cars to the back of Amtrak’s trains, a service the railroad has
offered for decades. Mr. Anderson cut off access in some locations and by his
own admission dramatically increased prices, arguing the private cars make
Amtrak’s trains late.
Standing beside the tracks one day this spring, Mr. Levin cackled as an Amtrak
regional train whooshed by towing the railroad’s “theater car,” which it uses to
give tours to VIPs such as members of Congress. “He might say it doesn’t bother
him, but it’s a thorn in his side,” Mr. Levin said.
Asked what he felt when he rode past the signs, Mr. Anderson responded,
“Nothing.”
Amtrak, Mr. Anderson says, is now on the verge of doing something once
thought impossible: breaking even on running its trains.
Its annual adjusted operating loss, which excludes capital expenditures and
some other costs, will fall to zero over the next year, which would be a first in its
nearly 50-year history. The railroad projects a 900,000-person increase in
ridership this year, to more than 32.6 million trips.
Amtrak says it is profitable on the Northeast Corridor between Washington and
Boston, where adjusted earnings were $524.1 million in fiscal 2018, including
$318.8 million from the Acela express train. But the company lost more than
$540 million on its 15 long-distance trains, which cover routes of 750 miles or
more.
Congress, however, is enamored with storied old train routes Mr. Anderson
wants to break up and wary of some of his other methods. And there are plenty
of signs lawmakers want to curb his ambitions.
“Everything,” he said in an interview last month, “takes longer than I want it to
take.”
Amtrak was incorporated at the nadir of the U.S. passenger-rail business in
1971, as airlines and interstate highways siphoned passengers and railroad
profits collapsed. Congress had agreed to let the nation’s railroads abandon their
obligation to carry passengers in addition to freight. The railroads dumped the
money-losing business of moving people into a new private corporation almost
wholly owned by the federal government. Many saw the entity as doomed to fail.
Half a century on, Amtrak has made itself a critical intercity transportation mode
in the Northeast, along with a few other corridors in Southern California and the
Midwest. But it has huge capital needs that can likely only be filled by more
support from Congress, which takes up the company’s reauthorization next year.
Mr. Anderson joined Amtrak in July 2017, as part of a move led by Amtrak board
chairman Anthony Coscia to stabilize the company’s finances and improve its
reliability.
In his nine years at Delta, Mr. Anderson hadn’t shied from conflict. He led a
charge against use of the U.S. Export-Import Bank to finance sales of Boeing jets
to foreign air carriers, and when an industry trade association backed a proposal
to privatize air-traffic control in the U.S., Delta quit the group. “That man loves a
good fight,” said one former Delta executive.
At Amtrak, Mr. Anderson got to work cutting costs and wringing new revenue
from the company’s commercial partners. He soon told skeptical lawmakers and
others that he thought Amtrak could reduce its operating loss to zero by 2021,
from $170.6 million in 2018.
Working alongside Mr. Anderson is Stephen Gardner, a former Senate staffer
who helped draft the 2008 rail reorganization that Mr. Anderson credits with
helping Amtrak improve its fiscal stability, in part by requiring states and
commuter-rail agencies to help shoulder the costs of some service.
Mr. Gardner, 43, worked as a conductor on small freight railroads after college,
before heading to the Hill. He is an emphatic proponent of investment in
passenger rail to improve travel times, cut congestion and boost the economies
of urban regions around the country, especially where travel options are
constrained by traffic.
“We’re not here to run a museum,” Mr. Gardner said in an interview. “We’re
here…to move people.”
The nonprofit Rail Passengers Association and others say Mr. Anderson and his
team, in their eagerness to increase profits and ridership on new corridors
between cities, are neglecting the storied national network of routes such as the
Southwest Chief, the Empire Builder and the City of New Orleans that Amtrak
was created to protect.