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EDITIONS
Wednesday, 26 June, 2002, 05:14 GMT 06:14 UK
Amtrak stays on the rails - for now
Senators discuss Amtrak
Talks with senators are continuing
Amtrak, the state-owned US rail network, has averted an immediate shut down.

Congress has agreed to discuss the $200m (133m) Amtrak says it needs to keep trains running.

And the company now has an extra week to continue negotiations for fresh funding with both Congress and the White House.


The situation then goes critical shortly after the Fourth of July

David Gunn
Amtrak president
That money would see the company through to the end of September, at which point Congress should agree its normal annual funding.

But if Amtrak does not get the money, the company says it could shut down services in early July.

No profit

Amtrak was set up as a non-profit corporation in 1971, and its services are used mostly by commuters in the North-East - around New York, Pennsylvania and New England - and in Chicago and California.

It has never made a profit, and is now $4bn in debt.

That, together with the fact that it has yet to finish its audit for 2001, means banks are unwilling to stump up fresh money.

If a deal can be reached with Transport Secretary Norman Mineta and with Congress, credit lines could be reopened.

"We are very, very close to coming to a solution to help Amtrak," Mr Mineta said.

"No one wants to see Amtrak die."

Strings

But Amtrak and Mr Mineta still do not see eye to eye on what strings should be attached to any new money.

Mr Mineta insists that aid should be tied to reforms.

"Something symbolic has to be in there," one government source told Reuters.

Amtrak, on the other hand, says it has already cut costs to the bone, while the suggestion by the White House that it can raise new money in a hurry by mortgaging Chicago's Union Station has been rejected because it would take too long.

In any case, even a shutdown could prove too expensive for Amtrak to handle.

David Gunn, the company's president since last month, said it would cost $40m and take four days just to take the trains off the track, not to mention a bankruptcy filing.

He told reporters the company would have only about $100m at the beginning of July.

"The situation then goes critical shortly after the Fourth of July," he said.

See also:

24 Jun 02 | Business
24 Jun 02 | Business
25 Jun 02 | Business
06 Jun 02 | Business
25 Apr 02 | Americas
19 Apr 02 | Americas
25 Oct 01 | Americas
04 Oct 01 | Americas
13 Sep 01 | Americas
11 Jun 01 | Business
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