— This is the script of CNBC's news report for China's CCTV on May 27, 2020, Wednesday.
Amtrak has 18,000 employees nationwide, and a 20 percent cut would mean 3,600 jobs lost. The cuts will take place in October, before the company's fiscal year 2021.
Travel in the United States has been severely restricted as a result of the outbreak. According to the Wall Street journal, Amtrak's chief executive said in an internal memo on Tuesday that the company's passenger volume and ticketing revenue had dropped 95 percent since the outbreak began this year. While Amtrak is slowly restoring some lines, it expects passenger traffic to return to only half its pre-epidemic levels by 2021. That may not seem too hard, but with the U.S. facing high unemployment, socioeconomic dislocation and the risk of a potential recession, it will take 16 months of solid growth to get there.
Since the outbreak, Amtrak has cut costs by $215 million this fiscal year and plans to cut costs by a further $600 million, including delaying improvements at some stations and asset purchases. Amtrak has already received $1 billion in aid from America's covid-19 program, but that still doesn't seem to be enough to deal with the full impact of the outbreak. In a letter to congress released Tuesday, Amtrak said it needs another $1.475 billion bailout. Otherwise, service will be cut and some lines may be suspended.
Amtrak has been one of the largest passenger rail companies in the United States since it was founded in 1970, but has been operating at a loss in recent years. Last year it served a record 32m passengers, closing to break even. It is expected to be profitable in fiscal year 2020, but this plan has been completely disrupted by the outbreak. The company now expects revenue to fall $1.6 billion and a loss of $1.4 billion in the current fiscal year.
The outbreak will not only disrupt Amtrak's profitability plans but could have a longer-term impact. One concern is whether Amtrak's plans for high-speed trains will be affected.
In November, Amtrak showed off a much-anticipated prototype of its new Acela express in New York.
At a time when Amtrak's profitability is under challenge, will this costly project be delayed? We will keep an eye on this issue.