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Deutsche Bahn Faces Financial Strain Amid Infrastructure Issues and Strikes

Deutsche Bahn Faces Financial Strain Amid Infrastructure Issues and Strikes
photo: Deutsche Bahn AG / Public domain/Deutsche Bahn
25 / 07 / 2024

Deutsche Bahn Group reported significant financial challenges in the first half of 2024, citing structural weaknesses in Germany's rail network, strikes, and severe weather as key factors.

The company's operating loss (adjusted EBIT) reached EUR 677 million, marking a decline of over EUR 950 million compared to the same period in 2023. DB Group's net loss after taxes escalated to EUR 1.2 billion from EUR 71 million in the previous year. Despite contributions from its logistics subsidiary, DB Schenker, losses in the core rail business, including mobility, rail freight, and rail infrastructure, remained substantial.

DB Group's CEO, Dr. Richard Lutz, highlighted the impact of extreme weather and operational disruptions on the rail infrastructure, stating, "Unprecedented extreme weather events have stretched the rail infrastructure, which was already in need of modernization, beyond its limits, and worsened the operational and financial situation in passenger and freight transport." Lutz emphasized the company's commitment to modernizing the infrastructure and implementing short-term measures to stabilize the situation, despite the challenges.

In spite of these setbacks, DB Group increased its capital expenditures by 35% in the first half of 2024, totaling EUR 4 billion, to enhance rail services and infrastructure. The German government provided significant funding to support these efforts. DB Group CFO Dr. Levin Holle mentioned the need for profitability across all business units, stating, "All business units in the Integrated Rail System must become profitable again. To do this, we need to improve our cost efficiency significantly."

The company plans to continue its modernization projects, including the upgrade of the Riedbahn line, aiming to transform Germany's congested network into a high-performance system. Despite a challenging start to the year, DB Group maintains its goal of generating an operating profit of approximately EUR 1 billion for 2024, based on operational improvements and continued government support.

Source: Deutsche Bahn (DB) Group

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