WASHINGTON, D.C. — Amtrak’s new president and CEO last week was still looking for a $200 million loan by July 1 to rescue the national passenger railroad, according to NationalCorridors.org. On the job for barely one month, he has begun hitting the airwaves as well as sending letters to the field and all employees.
David Gunn, who came out of retirement in Nova Scotia, Canada to take over the job, appeared on PBS’s News Hour on Thursday.
Gunn told anchor and interviewer Jim Lehrer, “If you do a cash flow for Amtrak, the revenues minus expenses, we have a negative cash flow for July, August and September [1991], and we need to borrow $200 million in order to sustain operations through the rest of the fiscal year.”
The railroader said Amtrak was “negotiating with banks. We have a credit facility, we’ve had one and we have borrowed before, but, obviously, times are a little tougher right now, and we’re trying to get a loan from our bankers.”
The potential reality of Amtrak closing down on July 1 is real, Gunn said, but added, “I alternate between being optimistic and pessimistic. It depends on the moment, but I think we probably have a 50-50 chance of getting the loan.”
Gunn said if the carrier does not have the cash, “We will have to say we’re going to close down and do it in an orderly fashion.”
He said two groups are responsible for Amtrak coming to its fiscal crisis.
“One is Congress – the politicians. They created Amtrak, and they put Amtrak on this fanciful search for self-sufficiency. There’s not a rail passenger system in the world that doesn’t require government subsidy for some either capital or operating or both. The next thing that happened is management attempted to do what the law required, which was to achieve self-sufficiency – and I think they tried far too long. They should have cried ‘uncle’ a long time ago.”
He opined they “should have said, ‘This is going to fail,’ because what’s happened now is we have a company that has run out of cash and has incurred enormous amounts of debt on its balance sheet. We now have $3.7 billion of debt. We added $700 million last year alone, last fiscal year. We have undertaken a number of initiatives, which have not proven successful. We’ve deferred a large amount of maintenance in trying to keep going under this mandate of self-sufficiency.”
Gunn said, “Either we convince our bankers to loan us the money – and I think they should, by the way, because we’ll be able to pay them back in the fall. I mean we will; we can pay them back. So, in a sense, it’s a sure deal. We will get next year’s appropriation, but the thing that should actually happen is, I think that the administration and Congress should at least, they should… ”
His thought went unfinished.
He noted, “We’ve had a lot of support from Congress, actually. We’ve been getting a lot of support on several appropriations, which would not solve the problem, but it would keep us going for a good period into the next year. We’ve had support. 160-plus Congressmen have signed a letter supporting us; almost 50 Senators have signed a letter” supporting Amtrak. The White House, however, continues to remain silent on the issue.
“The Administration, so far, has been silent in terms of what they want to do with this. We don’t expect them to say that they have a long-term faith in Amtrak in all cases, but at least say they want us to make it into the fall.”
Lehrer asked, “Why should tax money go to subsidize” the carrier?
Gunn responded, “We provide an essential service in certain areas. If you start on the West Coast, for example, like between Los Angeles and San Diego, we have a fairly frequent service there and move a lot of people. We operate commuter services in that area, for example, a peninsula commuter service. We operate the service to Sacramento, which is a pretty heavy and growing service, and we operate a service in the Northwest, an inner city service from Portland to Seattle, that corridor.
“We operate three transcontinentals, transcontinental trains. In some areas, it is a totally different sort of service, but it does provide mobility to some areas that don’t have a lot of options.
“When you go into a small town in Montana, you have a four-lane interstate even though there’s only a few people there.”