We're not quite to the end of FY12 yet, but I figure that we're close enough (and with the resumption of the route fiscal performance numbers in the latest MPR, we have enough data to at least start making educated guesses as to where Amtrak's fiscal picture is going.
1) The Acela and the NE Regional.
Here, we can find a set of operations that are suddenly producing massive above-the-rails profits. The Regionals are on course to produce an operating profit of $100 million, possibly slightly more, for FY12. This would be on $40-45 million in additional revenue versus last year and a similar reduction in costs. This would likely equate to an operating margin of somewhere in the 18-20% range for this year (YTD, the margin is 17.68% after OPEBs, 19.33% before).
We cannot expect the cost reductions to be repeated, but they offer a lower baseline to work from. This is more important than I think we'd usually give it credit for, since these costs would tend to rise exponentially. Basically, this gives the trains a lot more breathing room to make money. I'll also note that the savings here seem to be "real", rather than just some shift in cost allocations...overall costs are off around $50 million overall. Yes, some may be accounting, but $50 million is nothing to sneeze at.
The Acela is massively profitable; again, here we can find improvements both in terms of increased revenue ($9.1m YTD) and cost savings ($35.8m YTD). The Acela's current profit margins, however, run closer to 45% above the rails.
The Regionals seem likely to be the main driver of further profitability growth on the NEC. For good or ill, the Acela's market is somewhat limited at the prevailing prices; PPR for June was $157.44 and YTD was $150.50; this compares with $150.83 and $145.40 for June FY11 and FY11 YTD respectively. The PPR increases come to 4.4% and 3.5%, respectively...I am somewhat hard-pressed to see both fare increases in this vein /and/ ridership increases continue. Moreover, the YTD PPR of the Regional is currently running around 45% of the Acela and seems to be rising at least somewhat more slowly while load factors remain lower.
Basically, the Regionals can do a lot more on volume while the Acelas are a bit "boxed in" for the near future and further fare increases are likely to increase traffic diversion, likely stalling ridership growth until the new Acela cars are delivered (whenever that actually happens to be).
2) The State-Sponsored Corridors
Here, it should be expected that the PRIIA changes will, at the very least, eliminate most or all of the deficits. There may be one or more routes that end up on some sort of waiver, and there will invariably be some "bouncing around" as revenue figures vary, but the cash flow losses should be pretty much gone as of the end of FY13.
I've generally referred to the changes here as simply "wiping out" the deficits for Amtrak. This isn't strictly true, however...these costs also come with two "goodie bags" for Amtrak's cash flow:
-The first is the "additives", basically administration costs and profit margins for Amtrak above and beyond the direct costs of operating a route. In the case of Virginia, these are expected to increase the billed cost of the Lynchburger by about $700,000 net of the shift of some expenses from "route costs" (and ignoring "third party costs" going up by quite a bit), or about $440,000 once adjustments to third-party costs are included. The numbers for the Newport News line aren't comparable to this because of the shift from one train being included to five. Generalized, this would imply about an 8% increase in Amtrak's revenue above and beyond operating costs.
-The second is the capital charges. In the case of Virginia, these come to about $1.5 million in FY13 and $3.5 million in FY14.
The first would come to about $50 million in positive cash flow for Amtrak (8% times $620 million). The second is going to be far, far more nebulous because of the state car order...but at least based on VA's order and the routes that won't be using non-Amtrak equipment (basically all of the single-level routes outside of the Cascades), my best guess is that you're looking at another $30-50 million in cash getting pumped into the system (given the size of the Keystone and Empire operations in particular). Overall, this would seem to throw another $80-100 million into the system, net of any "tweaks" to revenue splits from trains using the NEC (i.e. Carolinian, VA Regionals, Vermonter, etc.), which could believably transfer another $10 million in revenue credits from the states to the NEC (and by connection pump that much extra into Amtrak).
3) The Long-Distance Trains
Will continue to lose money. The best that I think can reasonably be hoped for is an improvement in the cash flow situation with the addition of more coaches to the Superliner trains and more coaches+sleepers to the single-level trains (Viewliner/Amfleet) as the CAF order comes online and the Horizons are potentially moved around and Amfleets "displaced" to this route.
My best guess is that the overall losses here will hover in the $600 million range as long as increasing ridership and/or fares permit.
4) The overall situation
Looking at the numbers in each category, we have the following likely cash flow figures:
Northeast Corridor: $300-350 million positive
State-Supported Routes: $80-110 million positive
Long Distance Routes: $600 million negative
Total: $140-220 million negative
While this is not pretty, it is far less dire than one would expect it to have been. Basically, the LD network should be safe barring either a major ridership dropoff or a sudden funding cut. Moreover, I suspect that it is quite possible for a continuing rise in NEC revenue, in particular, to fill a substantial portion of this hole going forward, both due to increased feeder service in VA (the Norfolk train could be worth a few million dollars here and due to through traffic past WAS, and overall ridership here still seems in a marginal uptrend) and internal growth.
Even a cut subsidy should be survivable, at the very least; more importantly, a sustained subsidy will likely give Amtrak a bit of money to add/replace equipment.
1) The Acela and the NE Regional.
Here, we can find a set of operations that are suddenly producing massive above-the-rails profits. The Regionals are on course to produce an operating profit of $100 million, possibly slightly more, for FY12. This would be on $40-45 million in additional revenue versus last year and a similar reduction in costs. This would likely equate to an operating margin of somewhere in the 18-20% range for this year (YTD, the margin is 17.68% after OPEBs, 19.33% before).
We cannot expect the cost reductions to be repeated, but they offer a lower baseline to work from. This is more important than I think we'd usually give it credit for, since these costs would tend to rise exponentially. Basically, this gives the trains a lot more breathing room to make money. I'll also note that the savings here seem to be "real", rather than just some shift in cost allocations...overall costs are off around $50 million overall. Yes, some may be accounting, but $50 million is nothing to sneeze at.
The Acela is massively profitable; again, here we can find improvements both in terms of increased revenue ($9.1m YTD) and cost savings ($35.8m YTD). The Acela's current profit margins, however, run closer to 45% above the rails.
The Regionals seem likely to be the main driver of further profitability growth on the NEC. For good or ill, the Acela's market is somewhat limited at the prevailing prices; PPR for June was $157.44 and YTD was $150.50; this compares with $150.83 and $145.40 for June FY11 and FY11 YTD respectively. The PPR increases come to 4.4% and 3.5%, respectively...I am somewhat hard-pressed to see both fare increases in this vein /and/ ridership increases continue. Moreover, the YTD PPR of the Regional is currently running around 45% of the Acela and seems to be rising at least somewhat more slowly while load factors remain lower.
Basically, the Regionals can do a lot more on volume while the Acelas are a bit "boxed in" for the near future and further fare increases are likely to increase traffic diversion, likely stalling ridership growth until the new Acela cars are delivered (whenever that actually happens to be).
2) The State-Sponsored Corridors
Here, it should be expected that the PRIIA changes will, at the very least, eliminate most or all of the deficits. There may be one or more routes that end up on some sort of waiver, and there will invariably be some "bouncing around" as revenue figures vary, but the cash flow losses should be pretty much gone as of the end of FY13.
I've generally referred to the changes here as simply "wiping out" the deficits for Amtrak. This isn't strictly true, however...these costs also come with two "goodie bags" for Amtrak's cash flow:
-The first is the "additives", basically administration costs and profit margins for Amtrak above and beyond the direct costs of operating a route. In the case of Virginia, these are expected to increase the billed cost of the Lynchburger by about $700,000 net of the shift of some expenses from "route costs" (and ignoring "third party costs" going up by quite a bit), or about $440,000 once adjustments to third-party costs are included. The numbers for the Newport News line aren't comparable to this because of the shift from one train being included to five. Generalized, this would imply about an 8% increase in Amtrak's revenue above and beyond operating costs.
-The second is the capital charges. In the case of Virginia, these come to about $1.5 million in FY13 and $3.5 million in FY14.
The first would come to about $50 million in positive cash flow for Amtrak (8% times $620 million). The second is going to be far, far more nebulous because of the state car order...but at least based on VA's order and the routes that won't be using non-Amtrak equipment (basically all of the single-level routes outside of the Cascades), my best guess is that you're looking at another $30-50 million in cash getting pumped into the system (given the size of the Keystone and Empire operations in particular). Overall, this would seem to throw another $80-100 million into the system, net of any "tweaks" to revenue splits from trains using the NEC (i.e. Carolinian, VA Regionals, Vermonter, etc.), which could believably transfer another $10 million in revenue credits from the states to the NEC (and by connection pump that much extra into Amtrak).
3) The Long-Distance Trains
Will continue to lose money. The best that I think can reasonably be hoped for is an improvement in the cash flow situation with the addition of more coaches to the Superliner trains and more coaches+sleepers to the single-level trains (Viewliner/Amfleet) as the CAF order comes online and the Horizons are potentially moved around and Amfleets "displaced" to this route.
My best guess is that the overall losses here will hover in the $600 million range as long as increasing ridership and/or fares permit.
4) The overall situation
Looking at the numbers in each category, we have the following likely cash flow figures:
Northeast Corridor: $300-350 million positive
State-Supported Routes: $80-110 million positive
Long Distance Routes: $600 million negative
Total: $140-220 million negative
While this is not pretty, it is far less dire than one would expect it to have been. Basically, the LD network should be safe barring either a major ridership dropoff or a sudden funding cut. Moreover, I suspect that it is quite possible for a continuing rise in NEC revenue, in particular, to fill a substantial portion of this hole going forward, both due to increased feeder service in VA (the Norfolk train could be worth a few million dollars here and due to through traffic past WAS, and overall ridership here still seems in a marginal uptrend) and internal growth.
Even a cut subsidy should be survivable, at the very least; more importantly, a sustained subsidy will likely give Amtrak a bit of money to add/replace equipment.