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Former Delta CEO, Richard Anderson, Named Amtrak Chief Executive

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Former Delta CEO, Richard Anderson, Named Amtrak Chief Executive

Former Delta CEO, Richard Anderson, Named Amtrak Chief Executive
June 27
11:17 2017

MIAMI – Former Delta Air Lines President and CEO, Richard Anderson, was announced as the new Chief Executive of Amtrak on Monday.

Anderson assumes his position during a difficult time at the United States’ largest passenger rail company. Amtrak is currently facing pressure from New York Governor Andrew Cuomo to turn over control of Manhattan’s Penn Station due to poor conditions and a series of minor train derailments from unsafe track conditions.

Cuomo and New Jersey Governor Chris Christie have publically threatened to withhold state payments to Amtrak should Amtrak not turn over control.

In addition, Amtrak has been wildly unprofitable for many years and continues to leak millions of dollars annually. In 2016, Amtrak posted an unaudited operating loss of $227 million dollars from a record $3.2 billion in revenue.

Anderson entered the transit world in in 2001 when he was named CEO of Northwest Airlines. After leaving Northwest to serve as CEO of Untied Healthcare from 2004-2007, Anderson once again returned to the airline industry as CEO of Delta Air Lines during its merger with Northwest.

During his tenure at Delta, Anderson oversaw a historic turnaround that catapulted Delta from chapter 11 bankruptcy to becoming a profit machine. Under his reign, Delta invested heavily in aircraft, infrastructure, and human capital while remaining what he called “Delta Proud.”

Amtrak Acela Express Departing Penn Station in New York City

Amtrak Acela Express Departing Penn Station in New York City

After stepping down as President and CEO of Delta on May 2nd, 2016, Richard assumed the position as Executive Chairman of the Delta Board of Directors. After a brief stay on the Board of Directors, Anderson retired from his position on October 11th, 2016.

Anderson is sure to face increasing pressure to cut many of Amtrak’s unprofitable routes. While shorter routes like Amtrak’s Northeast Regional turn a profit, many of its transcontinental routes like the California Zephyr (Chicago to San Francisco) lose hundreds of millions of dollars annually combined.

Under President Donald Trump’s newly proposed budget, Amtrak is set to encounter large federal funding cuts. These cuts will likely force Amtrak to cut many of its longer routes. In addition to these cuts, Amtrak will also lose federal grant money for future rail expansion.

The impending cuts are a stark contrast from the Obama Administration where Vice-President Joe Biden lobbied heavily for Amtrak.

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Benjamin Bearup

Benjamin Bearup

Aviation journalist and social media guru from Atlanta, Georgia. I travel for the people I meet and the connections I make. High school senior with a passion for aviation business management. ben@airwaysmag.com @TheAviationBeat

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4 Comments

  1. psa188@yahoo.com
    psa188@yahoo.com June 28, 12:56

    He can’t whine about the ME3 competing with Amtrak.

  2. Rail Provocateur
    Rail Provocateur July 02, 18:56

    As CEO of Amtrak, Anderson must tamp down and take with a grain of salt the internal political and institutional biases that have only achieved the potential dismemberment of Amtrak. When in doubt, refer to Plato who stated, “a good decision is based on knowledge and not on numbers.” From his own experience, Anderson comes prepared with the knowledge of how the ‘bread and butter’ of Northwest, and later Delta, were the flights between Minneapolis-Spokane, almost exclusively serving North Dakota and Montana (e.g., Fargo, Missoula, Bozeman, Butte, Billings, and Great Falls). Anderson did not tolerate the politicalization of business decisions by his Board to forgo such contributions to revenue merely to focus on the Delta Shuttle in the Northeast.

    With this background, Anderson has a greater appreciation for the opportunities of the long distance routes that have been deliberately dis-invested and laid fallow at the orchestration of Amtrak’s leadership marching in tune to the Northeastern-focused Board of Directors. Important to appreciate Amtrak’s perpetual history of how it was a Board with such a slant to the Northeast that not only accepted the Northeast Corridor (NEC) in 1976 with no consistent funding to alleviate the deferred maintenance, but also, re-negotiated a sweetheart lease at NYC’s Penn Station in 1988 with the MTA/NJT without building in any profit or ROI.

    In view of this reference to such overt tilting against business opportunities across the national system in order to subsidize the Northeast Corridor, as CEO, Anderson would be wise to remember the admonition of Lord Salisbury (UK PM, 1895-1902): “The commonest error in politics is sticking to the carcass of dead policies.” As a former CEO of public airline companies, he knows how strict the SEC views dis-information to falsely inflate or smoke screen financials. Ideally, to know what you are actually walking into, it behooves you to view the different set of accounting books proclaiming the Northeast Corridor to be “profitable,” despite the GAAP requirement to include capital infrastructure costs before determining profitability.

    As Anderson digs into the organization to learn how it has stymied over the years, beyond being saddled with political appointments as CEO between 2005-2016, including two commuter administrators back-to-back, followed by an FRA administrator, he will certainly find Amtrak’s structure is stilted with the legacy of long-term, unproductive corporate sectors apparently continuing to exist with a sense of protection from change, or, performance requirements. The following sectors stand-out as requiring intervention to achieve purposeful change:
    -PASSENGER EXPERIENCE/SERVICE (What airlines refer to as “Customer Experience;” the lack of in Amtrak)
    -MARKETING (Indefinitely undefined; non-existent. If the Queen Mary as a troop ship in WWII was known as the “Grey Ghost,” Amtrak marketing is known as the “Silver Ghost”)
    -HUMAN RESOURCES/TALENT ACQUISITION (An unfathomable Quasar-like “black hole” lacking oversight and direction; inability to “think out of the box”)
    -FINANCE (Although siloed from Operations and Marketing; but who leads?)
    -GOVERNMENT/PUBLIC RELATIONS (What happened to such a very competent component that served Claytor/Gunn?)

    It is incumbent upon the new CEO Anderson to revamp the organizational structure and energize it with the outside blood, unfettered vision, and unbiased opinions of new management that does not know, is not recruited by, and will not kowtow to the Potomac establishment, as exemplified by the current Amtrak Board of Directors.

  3. Rail Provocateur
    Rail Provocateur July 02, 18:59

    For Amtrak to have a glimmer of hope, the CEO position requires a full-time officer, providing long-term stability and leadership to avoid merely keeping the seat warm for the next “Friend of the Potomac” seeking temporary shelter; which by default, allows subordinate “lifer” levels of management to make, or avoid, decisions, based upon whose patronage appointee or protege they represent.

    As CEO, Anderson must tamp down and take with a grain of salt the internal political and institutional biases that have only achieved the potential dismemberment of Amtrak. When in doubt, refer to Plato who stated, “a good decision is based on knowledge and not on numbers.” From his own experience, Anderson comes prepared with the knowledge of how the ‘bread and butter’ of Northwest, and later Delta, were the flights between Minneapolis-Spokane, almost exclusively serving North Dakota and Montana (e.g., Fargo, Missoula, Bozeman, Butte, Billings, and Great Falls). Anderson did not tolerate the politicalization of business decisions by his Board to forgo such contributions to revenue merely to focus on the Delta Shuttle in the Northeast.

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