DB back in the eye of the storm over finances and restructuring

DB back in the eye of the storm over finances and restructuring

RailFreight.com — 2023-03-23

Land transportation

Deutsche Bahn (DB) finds itself back at the centre of attention in Germany due to the current financial situation at the company and what it means for the ongoing restructuring and break-up plans for the group. The controversy followed a damning report released last week by the Federal Court of Audit, which stressed the need for fundamental reforms, among other steps.

According to Kay Scheller, President of the Federal Court of Audit, the current integrated structure of DB is keeping the federal government and the Ministry of Transport from exercising its due influence on the infrastructure and the running of trains. Secondly, the integrated company has not proven itself capable of sufficiently beefing up the network, preventing delays and cancellation or limiting losses. As such, “the crisis at DB AG is becoming chronic”, Scheller said in a recent report for the German parliament, and that “the railway system will end up on the sidelines” if the necessary restructuring is not implemented.

In recent days, reports have appeared in German media that focus specifically at the financial losses at DB Cargo, which will reportedly require DB to funnel more than €4bn from other division to its freight branch over the coming five years. DB late on 17 March 2023 put out a statement saying the reports of Der Spiegel were “simply wrong” and that there was “no basis for these claims”.

Federal government shares in the blame

While the emphasis is on the missteps by DB, Scheller and the Federal Court of Audit also point the finger to successive federal governments, which have not taken decisive action. This includes the current government. For example, Scheller points out that the Ministry of Transport still has not decided what the restructuring and break-up of DB would look like, even though the first concrete steps are to be taken this year.

Transport Minister Volker Wissing in late 2022 said that DB Netz, DB Stations and Service and DB Energie would merge into an infrastructure manager some time in 2023. According to Scheller, this would not resolve the underlying issue of the government and the ministry having insufficient control and oversight.

Goals out of sight

The report also blasts plans by DB and the ministry to beef up and upgrade the most heavily used sections of its network and create a true high-intensity, high-capacity rail system. In total, the operator has identified 40 sections, equal to 4,200kms of railway, which it will want to tackle in the current decade.

While the first two sections have been identified – the railway corridors Hamburg-Berlin and Emmerich-Oberhausen – the auditors say it remains to be seen when and if the situation on the German network will improve. Partly because of that, the report deems it unlikely that the stated goals of twice as many rail passengers by 2030 and a 25% share for rail in freight traffic will be achieved.