Pursuant to a legislative requirement, GAO reviewed Amtrak's financial and operating condition, focusing on: (1) whether Amtrak can overcome its financial and operating problems; and (2) alternative actions Amtrak could take to meet its future funding requirements. GAO found that: (1) Amtrak's financial condition has declined steadily since 1990 and its ability to provide nationwide service is seriously threatened; (2) although Amtrak's funding has increased to almost $1 billion in 1995, the increase has not been sufficient to cover its operating deficiencies and capital investment, equipment, and facility improvement requirements; (3) although Amtrak has assumed debt, deferred maintenance, and reduced staffing to address its capital shortfall, these actions have diminished the quality and reliability of Amtrak's service; (4) it is unlikely that Amtrak can overcome its financing, capital investment, and service quality problems without significant increases in passenger revenues or funding; (5) Amtrak revenues have suffered from an unfavorable operating environment and intense fare competition from airlines; (6) Amtrak faces additional equipment and facility maintenance costs and must negotiate new agreements with freight railroads to access their track; (7) Amtrak could substantially increase its funding by making capital investments and improving service quality to retain current riders and attract new ones, but this approach would be costly and difficult to achieve in the current budget environment; (8) the privatization of Amtrak is not feasible because few private firms would be willing to assume the risks of providing intercity passenger service; and (9) Amtrak could realign or reduce its current route system and retain service in the locations where it could cost-effectively carry the largest number of passengers.