Amtrak’s board of directors met for the first time on Monday to discuss its plans for the next five years, with some members voicing concern about the company’s ability to grow.
“We have a big challenge, I think, in the next 5 years,” said Charles B. Hochberg, chairman of the board.
Amtrak has said it will raise $1 billion in capital, hire more than 3,000 employees and expand its network in hopes of becoming the largest freight and passenger railroad in the United States.
However, a recent study by PricewaterhouseCoopers and Deloitte found that the railroads capital spending plan will not be enough to meet that goal.
The companies said they will spend $1.7 billion in fiscal 2019 and $1 trillion in 2020, compared with the $2.5 billion they projected in fiscal 2018.
The company said it would also increase its capital investment by about $2 billion in 2021 and $3 billion in 2022.
Amtrak’s chief financial officer, Mark M. L. Wolk, told the board the company needs $9.5 to $10 billion more in capital investment over the next decade to meet the growth targets.
He said that was because Amtrak is facing new and more complex challenges, including changing the way trains operate and the need to invest in the network.
“There are a lot of things that need to happen for us to be able to reach our growth targets,” he said.
“And we’re going to have to do it, and it’s going to be a lot easier than I think some of you have expected.”
Amtrak has struggled to grow, with revenue declining from $4.4 billion in 2018 to $3.9 billion in 2019 and a projected loss of $300 million in 2020.
It also reported a $1 million drop in earnings for the quarter ending in March, with profits falling $100 million.
The railroads chairman said the company will invest $10.5 million in a new facility in Kentucky to boost its capacity and upgrade its aging rail cars.
Amtrak plans to add 600,000 passenger cars a year in the future, while adding another 2 million cars to the network by 2025, Wolk said.
The agency also plans to expand its regional rail network, with a planned extension of the Central Pacific to Chicago, and plans to build a new line from Washington, D.C., to Atlanta, Georgia.
The next five-year plan will outline the company is on a path to be the nation’s largest freight rail carrier, said John A. Riedlinger, chairman and CEO of Amtrak.
He described the rail company as the largest carrier in the world with more than 1,000 miles of track, and said it was not only an economic driver, but a great service provider.
“As we look forward to the next couple of years, we’re working with a lot more companies, we are going to grow and be able provide better service to our customers and make more money,” he told the committee.
“It’s going be a very challenging time.”
The committee members agreed to recommend to the board that Amtrak consider increasing its capital spending to $1,200 per passenger car, an increase that would be phased in over the coming years.
“I think it is a good thing,” said committee member Robert L. Schieffer, who serves as vice chairman.
“The board has to take a look at the fact that this is a company that’s doing great things and it is not doing great on its own.
We need to look at it on a case-by-case basis.”
The chairman said he hoped the company would be able “to show a level of resilience and resolve” in the face of new challenges.
“This is a really challenging time for the railroad industry,” he added.
“Amtrak is doing very well and doing well in a way that it hasn’t done in a long time.”
But some members expressed concern that the railroad company could not keep up with changing market conditions.
“They have a lot to prove in terms of profitability,” said L.B. Bennett, a member of the committee who also serves on the Federal Railroad Administration.
“Are they going to continue to grow or not?”
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