(The Anchorage Daily News posted the following story by Richard Richtmyer on its website on April 1.)
ANCHORAGE, Alaska — The Alaska Railroad made an $8.9 million profit last year on revenue of $105.7 million.
Profits at the state-owned railroad were up 35 percent from $6.6 million in 2001. At the same time, revenue was down slightly from $107.3 million.
Railroad president and chief executive Pat Gamble and other executives began the year targeting a profit of $4.2 million, according to Johne Binkley, chairman of the railroad’s board of directors.
They made up for the revenue shortfall in large part by reining in expenses, Binkley said.
“It really shows what Pat Gamble and his team were able to do in terms of adapting to the changes,” Binkley said. “They were able to reduce expenses substantially through efficiencies, and that really resulted in a stronger bottom line.”
Total operating expenses last year were $92.3 million, down from $96.1 million in 2001, according to the railroad’s 2002 annual report. Part of that included a hiring freeze and a reduction in the number of year-round positions to 644 from 688.
Most of the railroad’s profits last year came from its real estate holdings throughout the state.
The railroad owns 36,228 acres along the Railbelt from Fairbanks to Seward. Half of that is available for lease.
In 2002, real estate accounted for $7.8 million in profits and $11.3 million in revenue, according to the railroad’s 2002 annual report.
About $76 million of the railroad’s revenue last year came from hauling petroleum, gravel and other freight. That was down 5 percent from $79.9 million in 2001.
Much of the decline is attributable to lower coal shipments after the Usibelli Coal Mine in Healy lost a key contract with its largest customer in South Korea.
Better than expected gravel shipments helped to offset the declines, Binkley said.
Meanwhile, revenue from the railroad’s passenger service last year rose to $14 million from $13.4 million. The railroad carried 480,049 passengers last year, compared with 472,274 in 2001, railroad officials said. Last year’s season was the first after the 2001 terrorist attacks, which hurt the tourism industry nationwide.
Looking ahead, the railroad expects profits and revenue to decline this year from 2002 levels.
The railroad expects its 2003 profit to be $5.5 million, according to a five-year forecast prepared in January. Revenue this year is expected to fall to $103.4 million.
“We’re not anticipating having coal to haul in 2003, and we also feel that there will be a continued slight decline in the other freight that we’re hauling,” Binkley said.
Railroad executives are aiming for freight revenue of $74 million this year, while they are expecting passenger revenue to rise slightly to $15 million.
Real estate revenue in 2003 is expected to fall to $9.7 million, with profits of $6.1 million.