National Railroad Passenger Corp. (Amtrak), DC (Amtrak, issuer rating A1, Baseline Credit Assessment (BCA) a2, stable) is the main intercity passenger railway company in the US and benefits from a stable operating environment.

Demand for passenger rail transportation has recovered from the trough during the COVID-19 pandemic to levels above 2019. However, future growth in ridership will be dependent on the ability to increase fleet capacity, necessary maintenance investments, ability to expand the service offering and competition against the car as a mode of transportation.

Record levels of federal grants have supported a shift in Amtrak's strategy toward growth as well as network maintenance and expansion. As a result, we expect a material increase in capital investments in the next few years.

We expect that operating losses will narrow as ridership grows. However, the need to support capital investments with additional operating expenses and labor will limit Amtrak's ability to reduce operating losses. It is unlikely that Amtrak will achieve standalone profitability in the next few years. Despite operating losses, Amtrak benefits from a strong liquidity profile and a net cash position. Debt will increase in the next few years with additional investments in its rolling stock, drawings under the RRIF loan and short-term funding of capital investments. But federal grants will limit the need for additional long-term debt.

Amtrak's credit profile reflects the very high default dependence between Amtrak and the US government (Aaa negative) and our expectation of a moderate probability of extraordinary support from the US government. A divided political environment can result in delays in appropriating funds or reduce receipt of federal funding.