EU bans compensation payments Deutsche Bahn is no longer allowed to give money to its cargo subsidiary
22.08.2024, 16:28 Listen to article
This audio version was artificially generated. More info | Send feedback
DB Cargo is making losses of hundreds of millions of euros every year. Until now, Deutsche Bahn has always provided financial support to its freight transport subsidiary – but this is now to end. The EU sees the compensation payments as a distortion of competition and is putting a stop to them.
According to government and supervisory board circles, Deutsche Bahn’s rail transport is facing the biggest cut in its history and must become profitable quickly. Under pressure from the EU, the rail group is no longer allowed to compensate for DB Cargo’s losses of many years and billions, said government and supervisory board representatives.
Deutsche Bahn’s freight transport subsidiary is making losses of hundreds of millions of euros every year. The EU sees the fact that these losses are always offset by the parent company as a distortion of competition compared to other freight railways. The EU has therefore initiated infringement proceedings, and an official decision is due to be made in October.
However, initial results are already available. It is therefore clear that the freight railway must quickly generate profits and radically change its business model. According to the report, the competition authority is giving the freight transport subsidiary around two years to get back into the black. However, it can remain in the group of the state-owned railway as a wholly owned subsidiary. Cargo does not have to repay any loss compensation payments it has already made.
“Comprehensive transformation program launched”
“The Federal Government, the Board of Management of DB AG and DB Cargo AG agree that the economic crisis that DB Cargo AG has been experiencing for years must be ended urgently and that urgent measures are necessary to achieve this,” said a spokesperson for the Federal Ministry of Transport (BMDV). “For this reason, a comprehensive transformation program has been set up, which must now be consistently implemented with a view to the state aid procedure in order to ensure a legally secure future for DB Cargo AG,” it continued.
DB Cargo is in the midst of a transformation. The company is already in the midst of a large-scale restructuring, which will involve cutting jobs and restructuring business areas, particularly in administration. Intensive negotiations are underway with the Railway and Transport Union (EVG) regarding the transformation.
A large proportion of the losses occur in so-called single wagon traffic. Loads are picked up directly from industrial customers and the wagons are assembled into long trains at marshalling yards. At the destination station, these are then dismantled again and the wagons are transported individually. Many experts believe that this service cannot be operated economically. The federal government therefore supports single wagon traffic with subsidies.
