America’s foremost railroad company, Amtrak is preparing to cut up to 20% of its workforce in the next fiscal year as the national passenger railroad continues to suffer from a huge decline in ridership as the coronavirus pandemic brought most travel to a halt.
Ridership and ticket revenue at the company have fallen by 95% since the pandemic began, Chief Executive Bill Flynn told Amtrak workers in an internal memo on Tuesday.
While Amtrak is planning to slowly restart some service halted during the lockdown—including the Washington-to-Boston Acela express service on June 1—the company projects ridership in 2021 will rebound to just half of what it was before the crisis.
“This may sound easy, but the climb back will be hard,” Mr. Flynn wrote. To return to even half of the railroad’s past ridership will require “substantial growth over the next 16 months, and it will have to be achieved against a backdrop of stunning unemployment, socio-economic dislocation, and a potential recession,” he wrote.
Amtrak employs more than 18,000 people nationwide. It plans to make the job cuts by October, the memo said, the start of Amtrak’s 2021 fiscal year.
A spokeswoman for the Transportation Trades Department, AFL-CIO, a coalition of unions that includes Amtrak workers, declined to comment.
The pandemic has devastated the finances of the railroad company, which had been steadily reducing its adjusted operating losses in recent years.
The company received more than $1 billion as part of the CARES Act to cover an operating shortfall in the current fiscal year, and executives have acknowledged that the railroad will need additional financial help to cover shortfalls in ticket revenue in the coming years, as they wait for passenger demand to return.
Amtrak has already cut $215 million in capital expenses this year and is targeting $600 million in further reductions like delayed station improvements and property acquisition, CFO Tracie Winbigler told employees last month.
Meanwhile, the company is trying to conserve $2.7 billion in cash on its balance sheet that has been earmarked for major projects, including the replacement of aging passenger cars along its heavily traveled Washington-to-Boston corridor.