German railroad makes billion-dollar loss in corona crisis

german railroad makes billion-dollar loss in corona crisis

Empty trains in germany and difficulties with foreign business have printed deutsche bahn deep in the red. From january to june, the state-owned group posted a loss of 3.7 billion euros, according to information obtained by the deutsche presse-agentur from supervisory board circles.

After a fare reduction and record numbers in january and february, passenger numbers plummeted in the corona crisis in march and have not recovered to date. The bahn nevertheless maintained a rough part of its service. In addition, 1.4 billion euros had been written off the goodwill of the foreign subsidiary arriva, it was claimed.

Group sales from january to june reached only 19.4 billion euros, according to the circles. That was 2.5 billion euros less than in the same period last year. In the current fiscal year there was a loss before interest and taxes (ebit) of 1.8 billion euros. The group presents its half-year results this thursday.

Arriva operates buses and trains in 14 european countries. The subsidiary was supposed to have been sold long ago so that billions could be made available for the railroad in germany. But no one wanted to pay the hoped-for four billion euros. Plan B, a borsengang, has been postponed indefinitely. As early as may, a federal government paper pointed to a billion-euro corona revenue shortfall at the foreign subsidiary based in england. Now the value of arriva has been corrected.

In fact, the railroad was still aiming for a profit this year, albeit smaller than in previous years. The background to this was a change in strategy: instead of maximizing profits, more emphasis was placed on quality and reliability for customers. That’s why, even at the height of the corona restrictions, the state-owned company maintained about two-thirds of its service, even though ridership at times was only one-tenth as high.

The federal government wants to significantly increase the number of rail passengers and has promised an additional one billion euros per year by 2020 as part of the climate package. A further five billion was promised to help it cope with the losses caused by the corona crisis – in return for cost-cutting measures in the group. In addition, the state-owned enterprise is allowed to incur more debt.

In may, the federal government put the damage caused by corona to the state-owned group at between 11 billion and 13.5 billion euros. Deutsche bahn plans to save up to 5.1 billion euros over the next few years, including 2 billion euros in personnel costs. But there will be no job cuts or an end to the many new hires.