• Amtrak HHP-8 Discussion: Use, Reliability, Disposition

  • Discussion related to Amtrak also known as the National Railroad Passenger Corp.
Discussion related to Amtrak also known as the National Railroad Passenger Corp.

Moderators: GirlOnTheTrain, mtuandrew, Tadman

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  by Nasadowsk
 
Remind me why Amtrak bought a bunch of locomotives from a snowmobile company, only to sell them to a tobacco company, just to lease them back?

Remind me why we fund this insanity, again?
  by Gilbert B Norman
 
Mr. Nas, consider Amtrak has come a long way from its first major procurements (Amfleet, Superliner, SDP-40, E-60) when the only way they could have such was a specific federal appropriation.

Yes, Amtrak does continue to receive a federal approation, but I think it should be encouraging that most is directed to the infrastructure. They are strong enough today to enter the private capital markets to procure new equipment. How they procure within such is whatever will be most economical. If PMCC has the bucks, and their "rental terms" are the most favorable, they get the contract.

I've known folks in Amtrak Finance face to face "along the way". Promise you, they "ain't dum dums".
  by Jeff Smith
 
ADMIN NOTE: Let's stay away from the political tropes...
  by DutchRailnut
 
not so sure lease company has a case right now. As long as Amtrak is making all lease payments, they would only need to make units complete at final date when they are being returned.
Only then could lease company demand them to be returned in working condition and complete.
  by WhartonAndNorthern
 
Nasadowsk wrote: Wed Nov 13, 2019 11:39 am Remind me why Amtrak bought a bunch of locomotives from a snowmobile company, only to sell them to a tobacco company, just to lease them back?

Remind me why we fund this insanity, again?
As a non-profit, quasi-Federal entity, Amtrak doesn't pay income taxes. Leasing companies do and the IRS allows deductions for depreciation of capital assets. A leasing company can collect a monthly fee and get a tax write off as the equipment depreciates. Amtrak essentially sold them a tax write-off.
  by mtuandrew
 
Considering that Philip Morris has not a chance in Hades of getting more money from these units through leasing and they’ll almost certainly be scrapped, what difference does their operational condition make? Amtrak would be doing them a favor by disassembling these units and having all the usable/sellable parts on pallets, ready to be put into shipping containers.

(Unless MARC decides to give them a second life)
  by KTHW
 
If MARC does continue to successfully rehab their HHP-8s, what would be the reasoning not to lease the Amtrak power to increase service (funding permitting)?
  by gokeefe
 
Cost to operate. Specifically fees charged by Amtrak for power.

Others here know better about the exact financial dynamics ...
  by ApproachMedium
 
apparently that fee to use amtrak power isnt a big deal anymore because MARC runs at least 2 or 3 ACS64s on trains as well as 4 HHP8s at one time. Theres something like 6 electric PP trainsets running in marc service and apparently, they want more because they just spent some spare change to put wire up on 2 more tracks in DC union which are almost always used by MARC trains!
  by rcthompson04
 
mtuandrew wrote: Wed Nov 13, 2019 3:49 pm Considering that Philip Morris has not a chance in Hades of getting more money from these units through leasing and they’ll almost certainly be scrapped, what difference does their operational condition make? Amtrak would be doing them a favor by disassembling these units and having all the usable/sellable parts on pallets, ready to be put into shipping containers.

(Unless MARC decides to give them a second life)
I suspect Philip Morris Capital (who hasn't done a new lease since 2002) knows they are going to have an asset that is worthless at the end of term and wants to try to have Amtrak cover its residual position by claiming it is Amtrak's fault that the HHP-8s are worthless. An easy way to do that default them for failing to maintain the assets, which is a requirement of any lease.

These leases are tax plays by the lessor who needs the depreciation tied tax deductions. Leases held by entities like Philip Morris Capital have a return option at the end to retain the FMV status. Even though there is a return option, it is widely understood that the nobody thinks anyone is going to actually return the stuff at the end of term. When someone returns it, someone is going to take a loss. PMCC looked at their lease docs and realized that Amtrak was not keeping up on maintenance so it is time to sue them to force Amtrak to take the haircut.

This is why American banks don't like doing leases and price them accordingly. We do FMV leases all day long, but not on unique assets that have very speculative values or utility at the end of term.
  by rcthompson04
 
DutchRailnut wrote: Wed Nov 13, 2019 3:18 pm not so sure lease company has a case right now. As long as Amtrak is making all lease payments, they would only need to make units complete at final date when they are being returned.
Only then could lease company demand them to be returned in working condition and complete.
Most leases, especially large ticket leases, require assets to be maintained during the term of the lease. There are also provisions permitting inspection.
  by east point
 
although a far out idea it may be that the HHPs could b sub leased to MBTA for Providence trains. MBTA is having major loco problems from time to time. There may be a restriction on Amtrak sub leasing ?
  by rcthompson04
 
east point wrote: Thu Nov 14, 2019 5:08 pm although a far out idea it may be that the HHPs could b sub leased to MBTA for Providence trains. MBTA is having major loco problems from time to time. There may be a restriction on Amtrak sub leasing ?
I would have to see the lease, but standard leases have such restrictions. For a customer the size of Amtrak, I could see allowing subleasing under certain conditions.
  by ApproachMedium
 
The HHPs specifically were not able to be subleased which is why the AEM-7s were in marc service and not HHP-8s.

The MBTA i dont think wants to get into this disaster with HHPs and all their problems. They would be better off going after the private individuals who currently own the AEM-7s maybe, and striking a deal up there? Teh AEM-7 AC units still have parts being made. alstom still repairs the power electronics and they are simple to maintain and operate.
  by DutchRailnut
 
MBTA if they fund electrification will be at least one generation behind ACS 64
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