What skills can an airline CEO bring to Amtrak for a turnaround…

DeanLobster3327 What skills can an airline CEO bring to Amtrak for a turnaround…What skills can an airline CEO bring to Amtrak for a turnaround and/or change? Amtrak Has Lost Money for Decades. A Former Airline CEO Thinks He Can Fix It. Onetime Delta CEO Richard Anderson has nearly eliminated the railroad’s operating losses, but some train fanatics are fuming about the changes By Ted Mann July 6, 2019 12:01 am ET The signs are aimed at the thousands of train passengers who rumble each day through North Philadelphia—two banners 14 feet high by 26 feet wide, mounted outside an old package-sorting facility built in the heyday of the Pennsylvania Railroad. “SAVE AMTRAK,” one says. The other: “FIRE ANDERSON.” No one has stirred up the people who feel deeply about the national passenger railroad— long-haul train fanatics, safety regulators, union employees, private railcar owners—quite like Richard Anderson, the former Delta Air Lines Inc. boss who took over as Amtrak’s chief executive in 2017. “He’s trying to run it like an airline,” said Jack Dinsdale, a railroad union official. He has tangled with Amtrak management over cost cuts that closed call centers and slashed staffing and hot-meal service on long-distance routes. Mr. Anderson, 64 years old, didn’t shrink from many fights in his years running Delta and Northwest Airlines. And after two years of a sometimes uncomfortable overhaul, he is unapologetic about his efforts to force Amtrak to change. Among the most contentious proposals is altering or eliminating some of the network’s venerable long-distance train routes in favor of more frequent service where the population is growing. It was a train buff, a former Philadelphia city official named Bennett Levin, who hung the “FIRE ANDERSON” signs outside the old Pennsylvania Railroad freight-sorting facility where Mr. Levin keeps a stable of lovingly restored antique train cars. Hobbyists are miffed by Mr. Anderson’s moves to limit their ability to attach private cars to the back of Amtrak’s trains, a service the railroad has offered for decades. Mr. Anderson cut off access in some locations and by his own admission dramatically increased prices, arguing the private cars make Amtrak’s trains late. Standing beside the tracks one day this spring, Mr. Levin cackled as an Amtrak regional train whooshed by towing the railroad’s “theater car,” which it uses to give tours to VIPs such as members of Congress. “He might say it doesn’t bother him, but it’s a thorn in his side,” Mr. Levin said. Asked what he felt when he rode past the signs, Mr. Anderson responded, “Nothing.” Amtrak, Mr. Anderson says, is now on the verge of doing something once thought impossible: breaking even on running its trains. Its annual adjusted operating loss, which excludes capital expenditures and some other costs, will fall to zero over the next year, which would be a first in its nearly 50-year history. The railroad projects a 900,000-person increase in ridership this year, to more than 32.6 million trips. Amtrak says it is profitable on the Northeast Corridor between Washington and Boston, where adjusted earnings were $524.1 million in fiscal 2018, including $318.8 million from the Acela express train. But the company lost more than $540 million on its 15 long-distance trains, which cover routes of 750 miles or more. Congress, however, is enamored with storied old train routes Mr. Anderson wants to break up and wary of some of his other methods. And there are plenty of signs lawmakers want to curb his ambitions. “Everything,” he said in an interview last month, “takes longer than I want it to take.” Amtrak was incorporated at the nadir of the U.S. passenger-rail business in 1971, as airlines and interstate highways siphoned passengers and railroad profits collapsed. Congress had agreed to let the nation’s railroads abandon their obligation to carry passengers in addition to freight. The railroads dumped the money-losing business of moving people into a new private corporation almost wholly owned by the federal government. Many saw the entity as doomed to fail. Half a century on, Amtrak has made itself a critical intercity transportation mode in the Northeast, along with a few other corridors in Southern California and the Midwest. But it has huge capital needs that can likely only be filled by more support from Congress, which takes up the company’s reauthorization next year. Mr. Anderson joined Amtrak in July 2017, as part of a move led by Amtrak board chairman Anthony Coscia to stabilize the company’s finances and improve its reliability. In his nine years at Delta, Mr. Anderson hadn’t shied from conflict. He led a charge against use of the U.S. Export-Import Bank to finance sales of Boeing jets to foreign air carriers, and when an industry trade association backed a proposal to privatize air-traffic control in the U.S., Delta quit the group. “That man loves a good fight,” said one former Delta executive. At Amtrak, Mr. Anderson got to work cutting costs and wringing new revenue from the company’s commercial partners. He soon told skeptical lawmakers and others that he thought Amtrak could reduce its operating loss to zero by 2021, from $170.6 million in 2018. Working alongside Mr. Anderson is Stephen Gardner, a former Senate staffer who helped draft the 2008 rail reorganization that Mr. Anderson credits with helping Amtrak improve its fiscal stability, in part by requiring states and commuter-rail agencies to help shoulder the costs of some service. Mr. Gardner, 43, worked as a conductor on small freight railroads after college, before heading to the Hill. He is an emphatic proponent of investment in passenger rail to improve travel times, cut congestion and boost the economies of urban regions around the country, especially where travel options are constrained by traffic. “We’re not here to run a museum,” Mr. Gardner said in an interview. “We’re here…to move people.” The nonprofit Rail Passengers Association and others say Mr. Anderson and his team, in their eagerness to increase profits and ridership on new corridors between cities, are neglecting the storied national network of routes such as the Southwest Chief, the Empire Builder and the City of New Orleans that Amtrak was created to protect. “It’s supposed to be a national network. It’s supposed to run across the country. It’s supposed to be funded by the government,” said Mr. Dinsdale, national vice president of the Transportation Communications Union/IAM, which represents workers in a call center Mr. Anderson shut down. “It’s none of the things these guys are trying to do.” Among the critics of Mr. Anderson’s plan to break up some of the long-distance routes were Joseph Boardman, the former longtime Amtrak CEO who died earlier this year, and members of Congress whose rural states and districts are traversed by the trains. Even though end-to-end ridership on Amtrak routes over 750 miles is relatively low, they say the train represents the only practical long-distance travel option for some residents of small rural communities poorly served by airlines—and a huge part of those local economies. The rail passengers group has estimated that the Southwest Chief, which runs between Chicago and Los Angeles, creates $180 million in annual economic benefits, or roughly three times what Amtrak pays to run the train each year. Those arguments are one reason Mr. Anderson has taken to dispensing to members of Congress laminated copies of the 2008 law that lays out his mission “to provide efficient and effective intercity passenger rail mobility consisting of high-quality service that is trip-time competitive with other intercity travel options.” Mr. Anderson says he understands the concerns of lawmakers from rural America, but that he is following the mission Congress set in statute. “This is what the law says,” he said. “And so the only thing I know to do is follow this law.” The Amtrak chief surprised a group of six senators and a congressman in June 2018 during a meeting at the office of Sen. Martin Heinrich, a New Mexico Democrat. Coolly describing what he called a “math problem,” Mr. Anderson said Amtrak wouldn’t help pay to upgrade a stretch of tracks in the Raton Pass along the mountainous Colorado-New Mexico border. Instead, Mr. Anderson planned to break the route into two sections, replacing the train with a bus for 475 miles from Dodge City, Kan., to Albuquerque, N.M. Bringing the 453-mile Northeast Corridor to a state of good repair will cost $42 billion, a government commission has said. A critical new rail tunnel under the Hudson River at New York City has been held up indefinitely by President Trump. Some administration officials say the president wants to use it as leverage over New York Sen. Chuck Schumer, the minority leader, but the White House says Mr. Trump is concerned about the cost. The railroad would pursue “alternative solutions,” Mr. Anderson said, again and again, until Mr. Heinrich finally interrupted in anger. “These are not solutions!” he snapped, according to people in the room and notes taken by a participant. “These are not solutions our constituents deserve!” Mr. Anderson insisted there would be no changing his plans, and Mr. Heinrich ended the meeting. It was followed by a flurry of senatorial news releases and legislation compelling Amtrak to continue running the existing route at least through 2019. Mr. Anderson has succeeded in making other changes. The CEO says his team has driven up ridership in part by overhauling marketing, cutting discounts and giveaways in favor of more effective search-driven online ads. The railroad has dropped membership in travel industry trade groups to save money, terminated nearly 200 consultants and eliminated 400 management positions in a 2017 buyout. Amtrak closed the Riverside, Calif., call center whose workers Mr. Dinsdale represents. Mr. Anderson said the cut involved no layoffs, and the company spent around $6 million on worker relocations. He cut scores of phone and fax lines, saving $5 million a year. He canceled a plan to spend hundreds of millions building a dedicated wireless network along the Northeast Corridor to improve Wi-Fi service, and scrapped a proposal to embed TV screens in the seat backs of aging Amfleet passenger cars—an idea airlines had already begun to abandon. Other fights are pending, including a proposal to reduce the ranks of Amtrak police, which has brought resistance from Congress. In Philadelphia, Amtrak is trying to raise the rent it charges the local commuter rail agency for its stations from $1 a year to $1.5 million. Amtrak officials say they are simply following the 2008 law, recouping revenue at market rates from those who use its infrastructure. At the same time, annual spending on track and power maintenance on the Northeast Corridor between Washington and Boston has risen by 15%, to $480 million, funding improvements the company says will make train service quicker and more reliable. “We took many steps to streamline the company so that we could free up investment in the core product,” Mr. Anderson said, from offices Amtrak is purchasing one block away from Washington’s Union Station. For all his years in airlines, Mr. Anderson has embraced his new role running a railroad. Still new on the job in 2017, he joined a track gang along the busy Boston-to-Washington corridor when fast-moving trains began bearing down from both directions. “The horns sounded and they pulled him underneath a piece of machinery where they would go for protection,” said Gerhard Williams, head of Amtrak’s engineering department. “He loved it.” Mr. Anderson has tapped former airline officials including Ken Hylander, who helped Mr. Anderson develop the safety program at Northwest Airlines, later following him to Delta. During the recruitment push, to show how much he needed the retired Mr. Hylander, Mr. Anderson texted him from the scene of the December 2017 derailment in Dupont, Wash., in which an Amtrak train sped through a curve and off an overpass, falling to the highway below. Under Mr. Anderson, Amtrak has pushed other railroads, especially commuter companies that run on Amtrak’s rails, to move more quickly to install anticrash systems known as positive train control. Mr. Hylander has borrowed directly from aviation in overhauling the railroad’s internal safety system, discarding punitive safety rules in favor of no-fault reporting of risks and near misses, which safety and aviation experts say encourages honest reporting of problems. Serious disagreements remain, however, between the aviation crowd and railroad veterans, including at the Federal Railroad Administration, which oversees rail safety in the U.S. Unlike in aviation, where many pilot responsibilities are being automated, passenger-rail engineers in the U.S. memorize physical landmarks to learn their “territory”—the physical routes they traverse in the train—and are tested on milepost locations and where low-speed restrictions start and stop. Amtrak has been buying rail simulators to provide better virtual training before engineers step into a train cab, and Mr. Anderson said he has been agitating for changes in one of the most sacrosanct modern train rules: the ban on cellphones, tablets and screens in train cabs. FRA has long banned any screen devices as dangerous distractions. Cellphones and texting have been implicated in fatal crashes, including one that killed 25 in the Los Angeles suburb of Chatsworth in 2008. But Mr. Anderson is trying to get FRA to allow tablets and “moving map” displays to help engineers see where trains are along the right of way, just as he outfitted each pilot at Delta with a Microsoft Surface tablet to receive weather alerts and other advisories. One union engineer who opposes the idea noted that there are big differences between navigating planes and trains: “A cow can’t walk in front of you at 30,000 feet.” Fans of long-distance trains are among the critics of Amtrak’s accounting. They say Amtrak’s cost allocations understate the expense of running trains on the Northeast Corridor—which reported adjusted operating earnings of more than $524 million last fiscal year—and exaggerate the losses of the long-haul routes. Mr. Anderson and board members defend the numbers. They argue the improving financial performance gives Amtrak greater credibility with lawmakers as it prepares for congressional reauthorization in 2020, and major requests for funding for new railcars and construction projects along the East Coast. The sooner Amtrak can show that it can turn a profit on the operation of its trains, the sooner the railroad may be able to entice private-sector investors to help the government fund needed improvements, including expensive tunnels in New York and Baltimore seen as vital. Still, even a former private-sector CEO isn’t arguing government subsidies for passenger rail can be avoided. Mr. Anderson said his own airline experience shows the dependence of transportation modes on government-funded infrastructure, from runways to highways to canals. “No one thinks twice about the fact that the federal government maintains the locks and dams system on the Mississippi River, right?” he said. In hearings before Congress, Mr. Anderson has been firm but polite. In private, critics have complained about a stubbornness that can bleed into arrogance. “There was zero deference,” said one person who was in the Southwest Chief meeting. At times, he has seemed to delight in playing hardball. A group of New York bankers recently took the Acela express train to Washington to pitch Mr. Anderson on a new financial product, according to people who were briefed on the meeting. Ten minutes into their meeting, the people said, Mr. Anderson stopped the presentation to say there was no chance that Amtrak would take the deal. “Why let us come all the way down here just to throw us out after 10 minutes?” one banker asked, according to the people. Mr. Anderson responded with a question. “How did you get down hereBusinessBusiness – Other