WASHINGTON – Amtrak's new president is warning the cash-strapped passenger railroad will shut down all service next month unless it gets a $200 million loan in the next three weeks.
President David Gunn is hopeful the loan will come through, Amtrak spokesman Bill Schulz said Thursday. As collateral, Amtrak can use $200 million of the federal appropriation it expects to receive when the new fiscal year begins Oct. 1.
Schulz urged passengers holding reservations in July and beyond to keep them.
Amtrak's governing board was meeting in Washington Thursday. Schulz said Gunn intended to propose a sweeping company reorganization reducing the number of "vice president" titles from 84 to about 20.
Gunn also wants to consolidate Amtrak's three railroad operating divisions — Amtrak West, Intercity and Northeast Corridor, which are now distinct business units — into the company's overall management structure.
Gunn said in a memo to employees that he wants Amtrak to "move back to a traditional railroad structure. ... We will have an operating department, a mechanical department, an engineering department, etc."
Under the plan, Schulz said, the existing division offices in Chicago, Philadelphia and Oakland, Calif., will remain open, but only to handle local operations, not to make policy decisions.
Gunn took over Amtrak on May 15, succeeding George Warrington. He previously ran transit systems in New York City and Washington.
Gunn announced the $200 million shortfall in a letter Wednesday to Amtrak employees. He said Amtrak still is asking for $1.2 billion from Congress for the fiscal year beginning in October.
Needing money to survive the final months of last year, Amtrak mortgaged parts of New York's Pennsylvania Station to get $300 million, and its debt has skyrocketed in recent years as Amtrak has struggled financially.
Amtrak backers in Congress are pushing an additional $55 million for Amtrak to repair damaged cars and locomotives.
In a letter to Sen. John McCain, R-Ariz., a leading critic of Amtrak, Gunn said Congress was wrong to declare in 1997 that Amtrak must wean itself from annual operating subsidies from the federal government by December 2002.
"For the past few years, Amtrak pretended it was on a glide path to self-sufficiency and maintained that fiction far too long," Gunn wrote to McCain. "No passenger railroad system in the world operates without some form of public support. Why Congress thought Amtrak could somehow become free of public support escapes me."
The House Transportation subcommittee on railroads approved a bill last week that would give Amtrak the $1.2 billion it requested for the next fiscal year, plus $775 million for security and safety upgrades.
The Senate Commerce Committee has approved a bill by Sen. Ernest Hollings, D-S.C., that would keep Amtrak operating for five more years and spend $4.6 billion a year on improving and expanding rail service.