Q&A: Amtrak hits the buffers

Amtrak, the US passenger rail service, is in financial crisis and threatening to shut down its train services.

But how has the company got into this mess and where does it leave the thousands of passengers who depend on Amtrak to get around each day?

What is the latest?

Amtrak has been given extra time to continue negotiations for fresh funding.

But the company has said that if it does not manage to secure more money, train services could be closed down at the beginning of July.

The US Congress has agreed to discuss the $200m (£133m) Amtrak says it needs.

That money would keep trains running until the end of September when the company would receive its normal annual funding from Congress.

What does the US government intend to do about it?

The government has been in crisis meetings with Amtrak and said it would work with the company and Congress to ensure passenger rail services continue.

There have been reports that the government will stump up at least some of the extra money the company wants.

Although a short-term solution might be achieved, there is little sign yet of debate let alone implementation of the kind of longer term reforms to the business that are needed.

How bad are Amtrak's problems?

The company has debts of almost $4bn. The banks will not lend it any money because its finances are in such poor shape and the audit of its 2001 accounts was incomplete.

The company, formed in 1971, has never made a profit and lost $1.1bn last year.

It has received subsidies from the federal government although these are now much reduced from the $318m it received in 1999.

The scale of Amtrak's problems came to wider attention in June 2001 when the company used New York City's Pennsylvania Station as collateral for a loan.

Amtrak said last week it needed $75m a month to continue operating but had only $40m left, which it would use to carry out an orderly shutdown of services.

How has Amtrak got into such dire straits?

Amtrak has always struggled. It inherited an already decaying rail network and has never had the money to make substantial investments.

In the 1980s, it was hit by deregulation in the airlines market. This led to lower air fares, in some cases making air travel cheaper than rail travel.

Amtrak has also been criticised for perceived management failings.

In recent years, plans to focus on high-speed services went embarrassingly awry, with new trains being delivered late and specifications failing to accommodate the "tilting" feature that allowed the high speeds to be reached.

Who are Amtrak's customers and what's the outlook for them?

Amtrak carries about 60,000 passengers each day on 265 trains. About 35,000 of them travel in the north-eastern US, with services centred on Boston, New York City and Washington DC.

Amtrak has yet to give details of how any "orderly" shutdown might proceed.

But serious disruption to services would be expected, with thousands of Chicagoans and Californians also likely to be affected.

Massachusetts authorities have said that, in the event of an Amtrak shutdown, they will lay on emergency bus services for the 140,000 daily commuters in the Boston area who usually travel by rail.

What's the longer term outlook?

It remains unclear, although several ideas are being bandied around. US Transport Secretary Norman Mineta - a member of Amtrak's board - wants the company to cut routes, expecting this will save money.

He has said "significant reform" and "fundamental management changes" are necessary, but has not given any more detailed ideas about how to proceed.

Some observers have said Amtrak should break itself up, selling off its profitable north-east corridor business and franchising out individual routes to private operators. Amtrak has dismissed this idea as "loony".

Many say the future for US rail is in commuter travel in metropolitan areas; the traditional long-distance operations are likely to be the first casualty of any restructuring involving route cuts.

After serious crashes in Florida and California in recent months, Amtrak will also have to tackle the issue of safety on the railways.