Deutsche Bahn Unveils Major Turnaround Program to Boost Operations and Profitability by 2027

Deutsche Bahn AG (DB) has presented a comprehensive plan to revitalize its rail operations, infrastructure, and financial health over the next three years. The turnaround program, known as 'S3', aims to address critical issues in the company’s rail services and stabilize its financial standing by 2027.

Werner Gatzer, Chairman of DB’s Supervisory Board, stated, "The DB Group needed to be put back on track, with a turnaround in infrastructure and operations and a recovery in financial health." Specific goals include reducing infrastructure-related delays by 20% and improving on-time performance in long-distance transport to 75-80%. DB also aims to generate EUR 2 billion in earnings before interest and taxes (EBIT) in its core business by 2027.

DB CEO Richard Lutz mentioned that the rail operator has faced multiple crises in recent years, including outdated infrastructure and skyrocketing operational costs. "Our strategy has helped us navigate challenges, but we have to be clear that the condition of our infrastructure is much worse than we anticipated," Lutz noted. He added that the S3 program would focus on rebuilding the company’s infrastructure and operations to ensure long-term growth while contributing to Germany's climate and transport objectives.

Key Areas of Focus: Infrastructure, Operations, and Financial Stability

Over the next three years, DB plans to overhaul 1,500 kilometers of rail lines and replace old, malfunctioning equipment to enhance service reliability. The Riedbahn line between Frankfurt and Mannheim is the first major project under this initiative. DB also plans to modernize 100 stations annually and implement smaller infrastructure upgrades to increase capacity.

In terms of operations, DB will prioritize timetabling efficiency by incorporating planned construction work into schedules upfront. Additionally, DB plans to tackle congestion at major rail hubs, including Berlin, Hamburg, Cologne, Frankfurt, and Munich, while simplifying operational solutions for regional and local transport.

DB will also focus on lowering its personnel expense ratio to 50% and reducing capital expenditures in transport segments. While job cuts are not planned, the company intends to decrease staffing levels in non-operational areas through voluntary measures and natural turnover. Simultaneously, DB will continue hiring staff in critical operational roles to maintain service levels.

DB Cargo, the company’s rail freight arm, will transform significantly, adopting a new customer-focused structure in 2025.

Overall, DB’s financial recovery will be crucial to its long-term success, with the company aiming to reach EUR 2 billion in EBIT by 2027 and a 12% redemption coverage ratio.

Source: Deutsche Bahn AG