WASHINGTON — According to a wire service, Amtrak pushed itself back from the brink late on Tuesday and will keep trains running this week while it works with the Bush administration and Congress to try and resolve its financial crisis, the railroad’s president said.
David Gunn, who told Congress last Thursday a decision on shutting down might have to be made this week, said the railroad could delay that to the first week of July now that a potential solution to its problems might be near.
“It’s too soon to know what’s going to happen,” Gunn told reporters in a telephone interview on Bush administration efforts to craft a rescue package. “There has been a lot of hard work on that.”
Transportation Secretary Norman Mineta said earlier on Tuesday that he was “very, very close” to completing an aid plan for Amtrak. He said a deal could be finalized by Wednesday.
The government and Amtrak have been trying to sort out terms for a loan guarantee so the railroad could access its credit line, which has been frozen by its banks.
Gunn, who has been on the job for just over a month, credited Mineta’s efforts and also praised lawmakers in both houses of Congress who support a Senate proposal for an emergency rail appropriation that would meet Amtrak’s needs.
Amtrak says it needs $200 million to operate through the end of September. It would presumably receive a new annual appropriation from Congress after that. Amtrak’s banks are refusing new loans because it has little cash and nearly $4 billion in debt and an incomplete audit for 2001.
Amtrak will begin July with about $100 million but will begin depleting that quickly, Gunn said. “The situation then goes critical shortly after the Fourth of July” without a federal bailout, he said.
Within days, Gunn said Amtrak’s cash flow would start to fall below the amount it would need to take its trains out of service. Gunn has said a shutdown will take four days, cost $40 million and require a bankruptcy filing.
Gunn said the railroad’s board would have to decide within a day or two of the Independence Day whether to proceed with a shutdown, if government efforts on an aid plan failed and its banks continued to not loan it more money.
He said that he had informed commuter systems in the Northeast, the Chicago area and California that depend on Amtrak for service about the latest developments in the saga.
Labor and government sources familiar with administration planning on Amtrak said the Transportation Department appeared to favor a rescue plan that would not involve congressional action and a loan guarantee looked to be a cornerstone of any proposal.
“No one wants to see Amtrak die,” Mineta said during an address to a transportation investment conference at the U.S. Chamber of Commerce.
Mineta has advocated tying any aid plan to reforms in how Amtrak does business. Gunn and his supporters in Congress say the railroad is cut to the bone and new austerity measures would not work.
But the administration appears adamant.
“Something symbolic has to be in there. The White House is not from the Northeast Corridor,” said one government source about Amtrak’s popular route between Boston and Washington.
While nothing is final, Gunn and other sources said the Transportation Department was pursing a loan guarantee of about $100 million and would make Amtrak come up with the rest through “self help” measures that include cost-cutting or generating new revenues from its few remaining assets.
For example, Gunn said the Bush administration asked on Monday whether Amtrak could mortgage Chicago’s Union Station, like it did last year with New York’s Pennsylvania Station to raise $300 million. Gunn rejected the idea as impractical, saying such a deal could not be done in time.
Amtrak, formed in 1971 as a for-profit corporation, has never made money. It lost $1.1 billion last year.
A full shutdown would not only disrupt the 60,000 passengers who ride Amtrak on 260 trains each day, but would halt or seriously interfere with commuter service in the Northeast, around Chicago and in California.