In need of $1 billion, Amtrak cuts management pay as it faces ‘unprecedented’ ridership loss
Daily ridership is down 90% while future bookings are down 85% year-over-year, according to Amtrak.
In need of about $1 billion in supplemental funding to battle an “unprecedented” drop in ridership, Amtrak has now taken “aggressive" steps to cut the pay of top staff and other measures, the company confirmed Saturday.
Daily ridership is down 90% systemwide while future bookings are down 85% year-over-year, according to Amtrak.
“Amtrak and our state partners estimate we need approximately $1billion in supplemental funding through the remainder of the year to make up for the unprecedented loss of ridership and revenue and to minimize employee and service impacts,” an Amtrak spokesperson said in a statement.
The company’s management employees now face temporary salary reductions — including a 100% reduction for its CEO — effective until at least Sept. 30, or the end of its fiscal year, according to an internal memo from Stephen Gardner, senior executive vice president and chief operating and commercial officer.
The pay cuts take effect for the first pay period in April, reflected in the employees’ April 17th paychecks. Incoming CEO William Flynn will succeed Richard Anderson on April 15.
Amtrak is “on pace to lose $1 billion in revenue this year due to the coronavirus,” Gardner wrote in the message.
Amtrak is also suspending its 401(k) matching contribution for management employees through the end of the calendar year. The measures have been taken “to protect the company’s future” and “to avoid involuntary furloughs,” Gardner wrote.
“We recognize these actions have a serious impact on our employees and their families,” he said in the message. “But we are taking this action to help protect everyone. We appreciate your support as we work our way through this crisis together.”
Amtrak confirmed that it has taken “aggressive measures."
In addition to a suspension of the 401K match, reduction to management pay, and its incoming CEO’s deferring his salary, Amtrak is “ending all non-safety-critical hiring; cutting discretionary travel, professional fees, and advertising spending; and deferring non-priority capital expenses," according to the company’s statement.
Amtrak has made service changes “due to significantly reduced demand in key markets,” according to its website. Its Northeast Corridor service is running about 40% of normal weekday schedules, including Northeast Regional and Acela services. Keystone Service, running between Harrisburg and New York, as well as its Pennsylvanian trains between New York and Pittsburgh have been cancelled.
Social distancing measures taken by state and local officials, including Gov. Wolf’s mandatory shutdown order for all businesses that aren’t “life-sustaining,” have kept people indoors and away from any transportation service.
Airlines are turning toward the federal government seeking a steep bailout, while plummeting ridership and service reductions for public transportation are likely to be a lasting pain point for agencies across the country. NJ Transit and New York’s Metropolitan Transportation Authority are seeking bailout funds.
In a letter Friday, Pennsylvania lawmakers turned to top congressional leaders for help, noting “the financial impact of the outbreak on SEPTA’s operations will be devastating."
SEPTA is taking its own “difficult short-term measures” including a cut to executive pay, eliminating overtime, and a hiring freeze, while it also considers further service reductions.
“Together, we will get through this," General Manager Leslie Richards told employees in a letter sent Friday. "Please stay safe and know that your health and well-being and that of our customers is always my priority.”
Staff writer Juliana Reyes contributed reporting.