WASHINGTON, D.C. — David Gunn turned down the job of running Amtrak in 1993 because he didn’t think the company was in enough trouble to capture the attention of Washington, USA Today reports.
But Gunn, who has run four big-city or regional transit systems, changed his mind in May after Amtrak’s president resigned. When Amtrak’s board again offered Gunn the job, he decided to come out of retirement on Cape Breton Island, Nova Scotia, to save the troubled passenger rail system.
“I took the job this time because I really thought Amtrak was in enough trouble that the political masters might actually deal with the problems,” says Gunn, 65. “It was in desperate trouble. That’s when things tend to get solved in Washington.”
So far, Gunn has been right. The Bush administration said Thursday that it would loan Amtrak about $100 million and would back Amtrak’s request for an additional $105 million to carry it through September. Conditions of the loan are still being worked out but include terms he can live with, such as a freeze on senior management salaries.
Last week, he told Congress that Amtrak was running so low on cash that he’d begin to shut down the system this week — including eight commuter rail systems it runs — unless Amtrak received $205 million.
Amtrak can’t get bank financing because it has nearly $4 billion in debt, and it has no significant assets left to mortgage.
But the emergency is not resolved. For the next fiscal year, starting Oct. 1, Gunn is seeking $1.2 billion compared with the $521 million the administration wants to budget. Congress is divided on whether to continue subsidizing a national passenger rail system. About 65,000 people ride Amtrak daily, excluding its commuter operations. Washington funds about a quarter of its $2.1 billion annual budget.
“We’ve got to get this organization stabilized and get some political agreement on how it’s funded,” Gunn says. “This business of hocking assets and cutting maintenance, we’ve run that out.”
He says Amtrak needs to repair 97 wrecked cars, at a cost of at least $100,000 each.
Gunn opposes scrapping routes that lose too much money. He believes that all routes should be kept but operated more efficiently. Gunn has told Congress he will look at “every route and service to improve efficiencies and cost recovery.”
Amtrak critics, however, say more subsidies aren’t the answer.
“All we’re subsidizing is excess cost,” says Wendell Cox, a member of the Amtrak Reform Council, a watchdog group appointed by Congress and the president. He believes Amtrak should start fresh by declaring bankruptcy and replacing its board of directors.
Gunn — and Amtrak’s labor union — say many of Amtrak’s problems stem from Washington’s demands that it wean itself from federal subsidies by this year.
“They had this fanciful idea that Amtrak would be self-sufficient. That was a mission that was impossible,” Gunn says. “What Amtrak did trying to achieve the goal was basically mortgage major assets like Penn Station, defer maintenance to save money, and it didn’t work. This is not a money-making business. You can always be critical in the way things were run, but it’s not going to be profitable.”
Friends and foes alike say Gunn’s candor will go a long way toward Amtrak’s survival. Even Amtrak critic Sen. John McCain, R-Ariz., hailed Gunn’s “back-to-basics approach,” citing his pledge to reveal more about Amtrak’s finances.
“He’s amazingly blunt,” says Joel Parker, an executive with the union representing 9,500 of Amtrak’s 24,000 workers. “I would be worried about Amtrak’s ability to survive were it not for his accepting this job.”
Gunn has spent the last 38 years running railroads and transit systems as the chief or other top executive. While general manager of the Southeastern Pennsylvania Transportation Authority in the early 1980s, he cut the system’s operating costs from $138 million a year to $97 million while rebuilding and replacing the subway cars and trolleys.
When he ran New York City’s 55,000-employee transit authority, even his critics praised him for improving the dilapidated system by rehabilitating subway cars and eradicating graffiti.
“He got a lot of money while he was here — probably $12 billion — and used it to restore the subway and bus systems,” says Gene Russianoff, a lawyer for the Straphangers Campaign, a New York transit riders advocacy group. “It was well spent.”
Under Gunn, the system replaced or overhauled the entire fleet of 6,000 subway cars.
“When the smoke cleared, the trains were 10 times more reliable,” Russianoff says.
“If I were on the Amtrak board and I realized we’re at the bottom of the well, he’s who I would hire. He’s like a Hail Mary pass.”