FOR IMMEDIATE RELEASE
Tuesday, December 1, 1998
Contact: Jeff Nelligan
Telephone: (202) 366-6312
OIG 38-98
OIG Releases Assessment of Amtrak Financial Needs Through FY 2002
The Department of Transportation’s Office of Inspector General today released an independent assessment of Amtrak’s financial needs through Fiscal Year 2000. The assessment found:
* Amtrak’s financial condition is reflected accurately in its financial statements and reports and possibly overstates an operating loss by $25 million;
* Amtrak’s Strategic Business Plan, revised in March 1998, indicated that Amtrak will incur a cash loss of $368 million in 2003, and a cash loss for the 1999 through 2003 period of $2.1 billion. In addition, several financial projections may not be achieved. If they are not, that will increase Amtrak’s projected cash loss. If the plan was followed, without any modifications, the assessment projected Amtrak could have a cash loss of $535 million in 2003, and a total cash loss for the 1999 through 2003 period of $2.9 billion.
* Amtrak has sufficient capital resources over the next 2 years to complete most of its 1998 business plan actions and implementation of high-speed rail service along the Northeast Corridor. Depending on the level of capital investment needs assumed, anticipated Federal funds ($2.2 billion during the plan period) will fail to meet these needs by between $0.5 billion and $1.8 billion for the period 1999 through 2003. This shortfall emphasizes how critical it is for Amtrak to reduce its operating losses. Every dollar the loss is reduced frees another dollar for capital investment.
The Amtrak Board is aware of the risk and has informed OIG that it has already initiated changes to the Strategic Business Plan that will eliminate at least $390 million of at-risk revenues and cost reductions cited in the assessment.
The Amtrak Reform and Accountability Act of 1997 requires OIG to assess Amtrak’s 1999 Strategic Business Plan. OIG has taken note of the Amtrak Board’s observations, concerns, and changes to its Strategic Business Plan, and will address their validity during the next phase of OIG’s congressional mandate.
The report can be found on the OIG website at http://www.dot.gov/oig
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