And then there were two – Amtrak appoints Richard Anderson

I had high hopes for Wick Moorman, but Mr. Moorman didn’t really want to be CEO of Amtrak. I suppose that now, not even a year into his tenure, he’s making that perfectly clear. The June 26 appointment of Richard Anderson, retired (as of last year) CEO of Delta Airlines and an executive credited with masterful merger and turnaround expertise.

First, why does Amtrak always get retired executives? Does it reflect a secret internal (to Amtrak’s board) mindset that passenger rail is somehow elderly and therefore not worthy of young, vibrant executives? Anderson is 62. I’m allowed to point this out, as I am 70, and, yes, I am ageist in this regard, because I know how many of my generation think.

Second, don’t expect anything meaningful to get done at Amtrak before the end of the year. Moorman and Anderson will co-CEO the outfit staring July 12, and this arrangement will end with Wick’s second retirement at the first of 2018.

Third, Amtrak seems to be operating on auto pilot. While Moorman has made several appearances on behalf of Amtrak, and has taken some of the heat for infrastructure failures at Penn Station, New York, he hasn’t really appeared to be doing anything that wasn’t already in the pipeline. Projects all over the map that involve Amtrak or state partnerships with Amtrak have been plugging right along and ignoring Trump’s budget proposals for zeroing out Amtrak funding.

Moorman doesn’t seem to be fighting for Amtrak, and I’m not sure that a turnaround expert will be any different. Yes, Anderson has transportation experience at Delta. (Just what we need; Amtrak becoming more like the airlines while the airlines are becoming more—in terms of service to the public--like the passenger railroads were before Amtrak.) He also has some experience at United Healthcare, which has never needed turning around. (Coming from a 40-plus-year career in insurance, I have very little trust for insurance executives.)

In all fairness, in a 2014 issue of Harvard Business Review, Anderson reported that his approach to turning things around at Delta was unconventional thinking. Maybe Amtrak needs some of that to survive the onslaught of budget-cutting. He said that Delta was mired in conventional thinking and needed to accept the market realities, then he proceeded to set Delta apart by merging with another carrier, revamping its public persona, and re-positioning the airline against its competitors with regards to pricing and customer service.

Now, some would argue that no airline can compare to service potentially available aboard a train, and that’s true, to some extent. Additionally, whether Anderson could use all or any of his specific tactics on Amtrak depends on how far out of the box the Amtrak board and Congress are willing to think.

For example, are there any successful or potentially profitable passenger rail services in the U.S. with which Amtrak could merge? No. They exist in other countries, but not in America. Furthermore, he bought employee loyalty at Delta with generous programs to make the employees stakeholders in the company. I don’t know if that can happen without a big infusion of private capital. Profit sharing is meaningless if there’s no real profit to share.

Many of Anderson’s tactics seem pretty standard for turnarounds that result in growth—as opposed to those that result in big profits only for the investors—and none of them appear applicable to Amtrak. Starting from the basic fact that Amtrak is not in bankruptcy and doesn’t have a hope of getting the kind of protection from a court of law that Delta most certainly received, and moving into the realm of Delta’s so-called “virtual mergers” with overseas carriers, and ending with the purchase of an oil refinery to ease the cost of fuel, I don’t see how any of these bold moves by Delta would apply to Amtrak.

Could Amtrak take equity positions in other passenger operations? I don’t think there are any that would benefit it. Could it buy into an oil refinery to reduce the cost of diesel, or a power company to reduce the cost of power generated to the Northeast Corridor? Possibly, but it would probably take an act of Congress.

So, I suppose I will give Mr. Anderson the benefit of the doubt, assume he is a much more clever administrator and leader than I have thus far allowed, and watch hopefully as Amtrak enters arguably the most difficult period in its always difficult history.

With that tinge of doubt born of having seen and heard it all before, I wish Mr. Richard Anderson well and Godspeed in orchestrating nothing less than Amtrak’s very survival.

©2017 – C. A. Turek – mistertrains@gmail.com

(Charles A. Turek is a writer and novelist based in Albuquerque, NM. After four decades working in areas of the insurance industry related to transportation, he now writes on all aspects of American railroading. Charles is a political conservative but believes in public funding of passenger rail as a part of the federal government’s constitutionally conservative obligation to provide for defense and public infrastructure so that private enterprise may flourish.)