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8 billion euros on the table for Deutsche Bahn in corona crisis

The German federal government and Deutsche Bahn are working on a financial support package of approximately 8 billion euros. The German state-owned railway company expects to lose between 11 and 13.5 billion euros in revenues over the next four years due to the corona crisis.

In addition, Deutsche Bahn wants to increase the debt limit set by the Bundestag. In recent years, DB has tried to pay off its debts, for example by selling subsidiaries Arriva and DB Schenker. The debt is currently at 24 billion euros. The limit is 25.4 billion euros.

Recovery from 2022

Three-quarters of the trains in Germany are running, but the number of passengers is up to 90 percent lower than before the corona crisis. The number of travelers is gradually increasing again, but the pre-crisis level for long-distance transport may not be reached until 2022, DB estimates in the German newspaper Frankfurter Allgemeine.

On long-haul transport alone, DB is likely to lose more than two billion euros this year. It is certain that all DB business units end the year with red numbers. Only the logistics subsidiary Schenker makes a profit. According to the financing agreement with the federal government, which the Handelsblatt newspaper had access to, a maximum of 400 million euros in profit will be lost in the next four years. DB Schenker normally earns about half a billion euros a year. In total, the corona damage amounts to eleven billion euros. In the worst case, if the recovery of passenger and freight transport does not start until after 2022, the total losses will rise to 13.5 billion euros.

To fill in the gaps in funding, the federal government is willing to make a new capital injection. About 5.5 billion euros at best and 6.7 billion euros if the situation gets worse than expected. Deutsche Bahn wants to cover half of the deficit with its own contributions. According to the Handelsblatt, more than four billion euros is expected to be saved by in material and personnel costs. Other sources speak of 150 to 180 million euros. Furthermore, the management should refrain from bonuses before 2020. DB does not want to lay off staff or postpone planned investments to modernise the rail network.

Criticism

The state aid has been criticised by some industry players. Two associations of non-incumbent railway operators Mofair and AllRail have warned the German government of the unreasonable subsidies for the state-owned company Deutsche Bahn. This could violate competition in the rail market, especially in its long-distance segment. All the operators should have a level-playing field for recovering from the coronacrisis.

Rail freight operators are also critical of the imminent capital injection of the German government into the national rail carrier. According to director Hans-Willem Vroon of interest group RailGood, the corona crisis “in continental Europe is increasingly turning into one large state aid operation.” “That is ultimately bad for taxpayers, consumers, traders and producers,” he said.

Source: Rail Freight

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Corona Newsline Supported by LiiFii Research Foundation.