page_title: Penn Central Transportation Company
section_title: Bankruptcy
hierarchical_section_title: Penn Central Transportation Company / History / Bankruptcy
caption_attribution_description: Penn Central Transportation Company passenger train, Bay Head, New Jersey, April 18, 1971.
context_page_description: The Penn Central Transportation Company, commonly abbreviated to Penn Central, was an American railroad name that was used at the Class I railroad level from 1968 until 1976. The railroad system that applied the Penn Central name was a combination of railroad systems from three railroads: the Pennsylvania Railroad, New York Central Railroad and the New York, New Haven and Hartford Railroad. The railroad system started off as a combination of the PRR and New York Central systems first as the system began as a merger between the PRR and the New York Central in 1968, the New York, New Haven and Hartford was added in 1969.
  The legal entity that eventually became the Penn Central Transportation Company was the former Pennsylvania Railroad, which absorbed the New York Central as part of the 1968 merger and at the same time began using the Penn Central name to reflect the merger with the New York Central. The company remained headquartered in Philadelphia after its merger with the New York Central. By 1970, the company had filed for what was, at that time, the largest bankruptcy in U.S. history.
context_section_description: PRR and NYC came into the merger in the black, but PC's first year of operation yielded a deficit of $2.8 million ($20.6 million today). In 1969 the deficit was nearly $83 million ($579 million today). PC's net income for 1970 was a deficit of $325.8 million ($2.14 billion today). By then the railroad had entered bankruptcy proceedings — specifically on June 21, 1970. The nation's sixth largest corporation had become its largest bankruptcy (the Enron Corporation's 2001 bankruptcy eclipsed this in large measure). Although the PC was put into bankruptcy, its parent Penn Central Company was able to survive.
  The devastating effects of Hurricane Agnes in 1972 further hampered PC operations, destroying many important branches and main lines.
  PC unsuccessfully attempted to sell off the air rights to Grand Central Terminal, and allow developers to build skyscrapers above the terminal, in order to fund continued operations. The resulting lawsuit, Penn Central Transportation Co. v. New York City, was decided in 1978 where the U.S. Supreme Court ruled that PC could not sell Grand Central's air rights because the terminal was a New York City designated landmark.
  The reorganization court ruled in May 1974 that PC was not reorganizable on the basis of income. A U.S. government corporation, the United States Railway Association, was formed under the provisions of the Regional Rail Reorganization Act of 1973 to develop a plan to save PC. The outcome was that Consolidated Rail Corporation (Conrail), owned by the U.S. government, took over railroad properties and operations of PC (and six other railroads: EL, LV, RDG, Lehigh & Hudson River Railway, Central Railroad of New Jersey, and Pennsylvania-Reading Seashore Lines) on April 1, 1976. It was a major step toward nationalization of the railroads in the U.S. They had been nationalized briefly during World War I, but the U.S. had held out against a world-wide trend toward nationalization of railroads until the creation of Amtrak which nationalized the country's passenger trains, on May 1, 1971. Amtrak initially operated a skeleton passenger service on PC trackage as well as other U.S. railroads.
  PC participated in two passenger service experiments in cooperation with the U.S. Department of Transportation (U.S. DOT). Both were aimed at upgrading passenger service in the Northeast Corridor. Between New York City and Washington, D.C., PC inherited the Metroliner experiment that the PRR and U.S. DOT had begun — fast electric trains that were intended for a maximum speed of 160 mph (257 km/h). The inauguration of service was delayed several times, and when it did begin, it was not shown in The Official Guide. The Metroliner was not an absolute success, but it reversed a long decline in ridership on the New York-Washington run. On the Boston-New York run PC operated a United Aircraft TurboTrain in an effort to beat the 3-hour-55-minute running time of the NH's expresses of the early 1950s. Information about TurboTrain schedules was even more difficult for the public to obtain than Metroliner timetables. The combination of untested equipment, track that had been allowed to deteriorate, and the general incongruity of space-age technology and traditional railroad thinking made the services the butt of considerable satire. Most of the Metroliner cars were stored out of service for a time (Amtrak converted them into cab control cars for Harrisburg-New York City Keystone Service in 2007) and the TurboTrains were scrapped altogether. PC's intercity passenger service was taken over by Amtrak on May 1, 1971. The commuter service, which was already subsidized by local authorities, passed first to Conrail and then to other operating authorities (SEPTA, New Jersey Transit, Metro-North Railroad, etc.)
  Facing continued loss of market share to the trucking industry, the railroad industry and its unions asked the federal government for deregulation. The 1980 Staggers Act, which deregulated the railroad industry, proved to be a key factor in bringing Conrail and the old PC assets back to life. During the 1980s, 
caption: PC locomotive #4312, an EMD E8, at Bay Head yard, Bay Head, New Jersey, April 18, 1971.
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