If you think of one you can quietly whip out your cell phone. Without further ado i want to bring to the stage the ceo of amtrak. [ applause ] thank you so much, thank you for that gracious introduction. It is great to see all of you. I have had a lot of great experiences in my life and my career, when i walked down the hall and see some of the other people at the podium this certainly ranks up with all of the highlights. I am delighted to be here. I do not to eat, i will not be stopping occasionally to put anything smart that i have set out. Not that i would say anything smart. The other thing i would say is it is not that much more expensive to upgrade to first class. Think about it, we need the money. Well, good afternoon. I thought i would read three things today very quickly and to be aware of time so there is plenty of time to talk about what you would like to talk about. I will give you a brief description of why i am here and why i am doing this, this is primarily so that my wife, who may be listening, can hear it again. Although i have no hope of convincing her. The second is to talk a little bit about amtrak and what it is and equally importantly what it is not. I think there is a number of misconception about what amtrak is. The third is to bleed into a little conversation about infrastructure, which i believe is the critical issue that bases not only our company, but our country in the future. That is the plan, let me try to do that in a minimal amount of time. I will give you a slightly different version of the introduction. And a lot of kids loved trains, if you never grew out of it. I like to say my mother dropped me fairly early and i hit my head and this was the affect. Nonetheless, that is the way that i was built. I have had a remarkably blessed life in every respect, and a wonderful career. Including my time at amtrak where i was fortunate enough to get a job with the Southern Railway. It was the southern predecessor back in the 1970s for those of you who are young. And then we had a great career that culminated in being ceo for about 10 years. I stepped down as ceo in middle 2016, we moved to charlottesville, virginia, a great place. We have our children and grandchildren all within 20 minutes. It was idyllic for about one year and i was ordinarily happy. So why did i end up doing this . Well, it became known that my predecessor, joe boardman would be retiring in my neighbors being thrown around as an ideal successor. I was approached by the chairman of the amtrak board named tony kosher from new york. They asked me about doing it and i said no. And then i made a mistake, i said i would be happy to help. So they ran a search, which did not really work very well. Tony came back to me and finally convinced me to my wifes bitter discussed to do it for a little while. A little while is defined as a short period of time. As tony put it so eloquently the other day i did not adhere to my contract and im now overrunning my allotted time. Fortunately contract adherence does not matter to me because i am not drawing a salary. There is very little drawback. Why did i do it . Three reasons as you heard i have been in this industry and long time. I have been remarkably blessed. It is an industry that i care a lot about. The blessed by the industry and its an industry that i care a lot about. The second reason and im giving you the noble reasons first is that i really do believe this is a form of Public Service. Amtrak is important to our country and it needs to be well lead and well managed and i thought i could make a difference, and that by the way is exactly why Richard Anderson is doing the job. In fact, i can tell you that in spite of my begging and pleading, he did no better in his contract negotiations for salary than i did. So the unhealthy reason of course is pure ego. Its okay when people start saying, you know, hes the ideal candidate for the job, but when you start believing it is a bad thing. Nonetheless, here i am. So lets start with a History Lesson about amtrak. It was really it originated in 1970. It began operations in 1971. To put it in perspective and i was trying to remember the year don penn central bankruptcy 68 and the Railroad Industry was in a state of disrepair. Most companies, not Southern Railway and a few others were really in very bad condition. Infrastructurewise, financewise, everything else, and in fact, you know, the common question was back then was, should the railroads be nationalized because they were important and in total disarray. So decline, disarray, particularly here in the northeast and out in the midwest, railroad Passenger Service was in free fall. The intere state highway had coe along. And the Railroad Companies already weak financially were just hemorrhaging cash running passenger trains and trying as hard as they could to get out of that business. But they were impeded to a large extent because there were a lot of public utility commissions and other people who thought, no, this is an essential service, you need to keep running it. So, it was not a good situation, and amtrak was conceived with this kind of grand bargain that the government would create an organization and ill talk about what kind of organization it is in a minute that would preserve what i call a rudimentary National Passenger network, and it was only Long Distance trains when it began. It relieved the private companies, the rail carriers, of their obligations which they were happy to do, and in return, they gave equipment and, more importantly, they gave amtrak, now amtrak, the right to run their trains, run our trains i should say, on their railroads for really marginal, very marginal costs, and that deal still exists today. Its a deal that i can tell you after a long career in the freight industry, the current Freight Railroads arent that particularly happy with, and some of them tend to forget that it was the bargain that was struck. So, why do i tell you this . There are a couple of key ideas by the way, we then took over commuters, the corrid corridor, penn station where were having a great summer in the mid 70s because after penn central went bankrupt they formed a Company Called conrail which many of you will remember but it continued to struggle mightily and the next step was to relieve them of what really were money losers and that was the commuters operations, and then with that came chicago metro and some other things. The first lesson is one thats fairly simple. When people talk about bringing private companies in to run passenger trains and, gee, wouldnt that be a lot better, you know, history has already told us they couldnt do it. So its not a question of, you know, ability to run a good organization, and ill touch on that. Its really a question of fact that in particular, the Long Distance but in general Rail Passenger transportation is not a particularly Good Business mod model, okay . Asset intensive, relatively high labor costs, and you know, you dont turn equipment that well and you maintain your own infrastructure which is quite expensive. So thats lesson one. But lesson two and the thing i really want to touch on is that amtrak was created and this is absolutely essential in my mind as a corporation. In fact, it was chartered and created as a forprofit corporation. Now, the people who built it up, created the idea, always knew. They knew, not a Good Business model. This thing will probably never make money. But it was sold at the time to the president and the congress as a concept where, yes, just create this and it will, in fact, become profitable. It hasnt yet, and in some ways, particularly if you look at it on a gap basis, it never will. But, its a corporation. Its a company. Since i have been in starting last september, my mantra to everyone, to the outside world and more particularly, inside the company, is were going to run it like a Great Company. Were going to benchmark ourselves against the best private corporations, the Norfolk Southerns of the world, the deltas of the world, because we can do that, and if we do that, then well deliver Great Service and well minimize the amount of money that we require from the government which does, by the way, two things. One, subsidize our operating loss and then pay for our capital expenditures. So what does that mean in terms of running a Great Company . Well, when i came in theres a good amount to do, and i started off with what i thought of as the four tierone issues to deal with. By the way, there are twotwo issues, twothree issues. Ive identified a couple of tiersevens. Im not losing sleep on anything above two right now. But what did we need to do . We needed to organize appropriately so that we had a functional organization with people responsible and accountable for things in a way that made the most sense from running the railroad and running a passengerfocused organization. Once we organized, get the right people in the right jobs. Just business sense. Second, really critical, focus on creating a strong Safety Culture. Amtrak is reasonably good at safety, and im talking primarily about safety of employees but also safety of the public and safety of the traveling public and safety of our communities, but we can do a lot better. Ive been around great Safety Cultures and seen them, and thats where we need to take the company and under the very capable leadership of our chief operating officer, were starting to take very meaningful steps to create that culture, but culture change takes a while and you never stop in order to do it. Third, on top of that, create a strong focus on what i like to call operational excellence. Delivering efficiently and effectively and a strong Safety Culture enables you to build a Strong Operational excellence culture. So thats number three, and were driving that way, i think now. Again, a lot of work to do, but this is something obviously that ive seen and Richard Anderson has seen, and he will be great at doing this. And then fourth and you referred to that, a couple of these issues. Get back to focusing on customer and the Customer Experience. And Customer Experience defined as ticketing, right, stations, our employee interactions, be they with an onboardattendant, a conductor, assistant conductor, a station agent, whoever. And then last, our equipment. Those of you who ride the train may have looked around at our equipment and said, you know, it looks a little steale, right . We can do better than that and we have started some activities that will start to make our equipment a lot better. Its old, but old doesnt mean it cant be good. More of you have flown on 40yearold airplanes than you realize, because when you walk in you dont say to yourself, man, this thing looks like its 40 years old. In some cases you say this looks like a new airplane. And we can do that. Its not that expensive. Its not that hard, but it just requires that mindset of think about our customers. And thats what Great Companies do. In a very real sense, amtrak is a government contractor, just with a different Business Model. Were just like a defense company, defense contractor. Were just like a highway builder. The only problem we have is that unlike those companies who can bill the government directly and bill them enough to have a profit margin, pay their shareholders, do all of those great things, we rely on what are user fees, passenger fares. Because the marketplace doesnt sustain the passenger fares we need to make that profit, we ask the government to make up the difference. Having said that, we need to understand, as i keep saying, that we are a company. So, the point i drive home is that a problematic Business Model is absolutely no excuse for not being great, and thats where im trying to were trying to take amtrak. Let me very briefly tell you what amtrak is today in addition to and this i ask of all of you. Next time somebody says, amtrak is a government agency, just say, no, no, no, its not. Its a very different animal. So, let me tell you about our businesses. Let me look at each one of them. Ill start with the Long Distance, and you may have seen most of you have seen the trumps trump administrations proposal which is to defund the Long Distance business, and the Long Distance business is what people think of when they think of amtrak. Its why we were created. But if you look at the numbers, its about 15 of our ridership. Its only about 23 of our revenue, and thats typically because people ride a little bit farther. And it is what defines our company to most of the nation. In a very real sense, its also the political glue that holds us together because it turns out that we get a lot of support from a lot of members of the house and members of the senate on both sides of the aisle in places where we run passenger trains. Their constituents like it. It is the big money loser. But, you have to understand amtrak accounting, and this is the other thing were up on the hill talking about all the time. Were like any other company with a network cost, right . We have direct expenses which are paying for crews, paying for fuel, paying you know, how much it costs to get that train from a to b. Then we have various layers of allocated costs. If you look at the direct cost its about 5 billion in revenue and a little less than that in expenses. The loss is all allocated costs. The problem with allocated costs of course is if that funding gets cut on the Long Distance side, we lose that 500 million in revenue and all those allocated costs get dumped over on the other two businesses. So the net result of cutting Financial Support to the Long Distance business is, we need more money from congress. Not a good outcome. I believe theres a mission for the Long Distance trains. We serve a lot of underserved parts of this country in terms of public transportation. But i always say, you can have an argument about whether or not the government should be in that business, but defunding it in the way thats proposed would be extraordinarily problematic for the company. Next business statesupported trains, 18 i think it is statesupported trains directly. Depends on how you count direct support, but its a growing business. Its 50 of our ridership, ride on statesupported trains. So its a Good Business. Its only 22 of our revenue because we dont because most of its short haul and we dont always control the fares. The states make up a good bit of the operating loss but by design, we subsidize the states to some extent. So while it doesnt lose as much money as Long Distance, it does lose some money, but its where the Growth Opportunities are and where i think Passenger Rail goes, right . I ride the train from charlottesville to washington most days because i would rather ride the train. In fact, id rather have a root canal than get on i95 and come up here in the mornings. And those trains are full because a lot of people feel like i do. And last piece is the corridor. The northeast corridor, it is 38 of our ridership, 55 of our revenue. And thats because, you know, we have a market in which we can charge adequate fares and we have a first class product in the acela which does very well. And the corridor, even after allocated costs, makes generates cash. It would not be profitable on a standalone gap basis, but it is the Cash Generator for us. And i should mention by the way, last year the operating loss at amtrak was 230 million. We covered 94 of our operating costs. You look around the world. Thats a remarkable number. So its not like we dont know how to run a railroad. The corridors great but it leads me to the last thing, infrastructure. And if i worry about one thing at amtrak, its infrastructure and its the northeast corridor. On the Long Distance network, we run on the freights, on the host railroa railroads, which ed so ably represents. Ive known him too long. That creates problems for us sometimes in terms of Freight Train interference and things like that. Heres the good news, uputting y freight hat on. The one piece of infrastructure in this country thats in great shape is the Freight Railroads. Theres been enormous investment, i will tell you, at all of them Freight Railroad infrastructure is the best shape its been in 70 or 80 years which is a positive thing. The corridor not so. The track is okay. Ride quality needs to improve. The signal system is old. The overhead wiring. We have some 80yearold cat narroirrow out there. We have the b and p tunnel south of baltimore, 30 Miles Per Hour with curves in them, 127 years old, a little past their sellby date. And then the microcosm of this is the gateway programs, the railroads from newark to penn station. A lot of it still double track. Its the busiest part of the railroad. We run 450 runs on the weekdays. We run 24 trains an hour in each direction through the two tunnels under the hudson river. So we have huge capacity limitations. We have 200yearold bridges in that 8. 5 miles, and then we have two tunnels on the hudson and two of the four on the east river that were flooded by sandy. And the deterioration of these tunnels which were opened in 1910 has just st