PKP CARGO S.A. Faces Financial Challenges: New Management Team Steps In for Restructuring

PKP CARGO S.A. is facing serious financial problems, with a new management team stepping in in April 2024 to try and turn things around.

The team, led by Dr. Marcin Wojewódka, Monika Starecka, and Paweł Miłek, says that years of politically driven decisions have left the company in a tough spot. Now, PKP CARGO has had to start a sanitation process and lay off thousands of employees to stay afloat.

Due to its financial issues, PKP CARGO can’t pay severance and other benefits to laid-off employees right away. "All persons who will not receive their severance payments, compensations, awards or equivalents on time are fully entitled to them," said Monika Starecka, Acting Member of the Board for Finance. To help cover these payments, the company plans to apply for a loan from the Guaranteed Employee Benefit Fund. Management promises that all payments, plus interest, will be made as soon as possible.

The company’s debt has reached over EUR 1.2 billion, with nearly EUR 460 million spent on salaries in 2023 alone. The previous board approved raises despite knowing funds were tight and made overly optimistic revenue forecasts for 2024. Just before the 2023 parliamentary elections, they also chose to lease back some of the company’s best locomotives, spending the cash on expenses instead of debt payments.

The new management team has openly criticized past practices. Dr. Wojewódka said, “The previous few years at PKP CARGO have been an example of disastrous management, bad decisions, and the use of the company to build political and trade union influence." He echoed Deputy Minister of Infrastructure Piotr Malepszak, who recently called PKP CARGO "an academic example of how not to manage." Wojewódka says the team is focused on reducing costs, getting new contracts, and boosting efficiency to bring the company back on track.

Even with these plans, PKP CARGO’s stock value has taken a major hit, dropping from EUR 920 million in 2014 to under EUR 138 million by early 2024. However, the new team is hopeful that the restructuring efforts will slowly help stabilize the company’s finances and set it on a path to recovery.

Source: PKP CARGO