Ivan Bednárik: Despite the effects of the pandemic, Czech Railways will be in the black. Large investments in fleet renewal are planned.

Ivan Bednárik: Despite the effects of the pandemic, Czech Railways will be in the black. Large investments in fleet renewal are planned.
photo: https://images.app.goo.gl/bPmoytEwW5hWWAte8/Ivan Bednárik/Ivan Bednárik
23 / 02 / 2021

As a General Director of Czech Railways, he spoke about his appointment to the position in December, as about a suicide mission. How does he feel about it today? The Passenger and the freight transport are the different matters, but Mr. Bednárik convinced us that it is not such a big difference.

The Bednárik’s primary goal as the company and the group CEO is to increase efficiency so that the national carrier is competitive on the market. Czech Railways must learn to trade correctly on the market. The national carriers were in an uncomfortable situation. Although Czech Railways was on the open market, it did not understand the market game. It is necessary to respond promptly to all opportunities. Thus, Czech Railways found an experienced person who has extensive experience in this field, which Czech Railways lacked. The new CEO wants to be the right medicine for Czech Railways and wants to start liberalization.

The COVID-19 issue has affected all sectors, including railways. Therefore, Czech Railways has a crisis plan for 2021. Under it, it will be necessary to reduce costs as much as possible due to declining revenues. The plan is set in respect of the fact the sales in the first half of the year will reach only 65% of the same period of 2020. In the second half, Czech Railways expects the situation to improve. Revenues should reach up to 85% of fare sales in 2020. The prediction of ČD's annual result for 2021 should reach a rough estimate of CZK 60 billion. It is also necessary to add that in 2020, Czech Railways lost up to 4.5 billion crowns due to a decrease in fares.

In the first wave of COVID-19, there were also problems with ČD Cargo freight transport. There has been a drop in volume, for example, due to low container traffic from China. Eventually, automotive also started to have a problem when production was stopped or limited. This had a significant effect on the number of shipments. For ČD Cargo, cooperation with Automotive is not only about the transportation of finished cars, but also material for production. For example, limestone, coal, iron ore, sand, iron sheets. For illustration 100,000 tons of finished cars transports and another 300,000 tons of commodities transports necessary for production were canceled in a month.

The year 2021 is going to be sensed as subsidiaries' cooperation year in the Czech Railways Group, which will help balance out the group financial results with the results of the mother company. These companies should be in the blacks and Czech Railways is using consolidation. Thanks to budgetary readiness, the transport of Czech Railways will be almost zero, and if it is combined with the activities of subsidiaries abroad, the result of the Czech Railways group will be in the black. Despite the wave of the COVID-19 pandemic, Czech Railways will be in the black.

But will the company be also affected by redundancies? The employees from the operation department that are needed to provide their duties, certainly do not have to worry about their jobs. The CEO, Ivan Bednárik, confirmed that in the Czech media. However, another situation may arise for 671 employees, mainly in office positions, who have contractual salaries. The average salary reaches 60 thousand crowns, the median is 50 thousand crowns. These are mainly officers at the General Directorate of Czech Railways. The contractual salary is always negotiated one year in advance, it is a type of contractual salary between the employer and the employee. In this case, Czech Railways, as the employer, will probably propose a reduction in wages. Other tariff wages have different development. There has been an increase of 2% against 2020 due to collective negotiation, and another increase thanks to lowering taxes due to the abolition of the super-gross wage.

Czech Railways also comes with one big novelty. The endowment fund “The Railway with the Heart”, which is intended to help railway workers in need. The establishment of the endowment fund is also related to the topic of "blue pride", which Czech Railways employees are very famous for.

A detailed discussion on the renewal of the vehicle fleet is running nowadays in Czech Railways. A plan is lined up for the next ten years, during which an investment of up to CZK 130 billion should be spent, most of which is for the purchase of the fleet. As one can see, Czech Railways is not afraid of the investment and is continuing its long-term strategy. Fleet modernization is related to both customer satisfaction and benefits, and modern safety systems such as the ETCS. According to Mr. Ivan Bednárik, it is also a matter of time before Czech Railways will have the first hybrid car sets in its fleet implemented. Old types of diesel engines are going to be limited in the short future.

Czech Railways, led by Ivan Bednárik, is also newly using the possibility of leasing railway locomotives and cars with the option of subsequent purchase, which solves a long waiting time for the delivery of new vehicles.

Due to Covid-19 from 2020, the railway is going to be losing 5 billion crowns in 2021. According to Ivan Bednárik, if one includes other transport companies, metro, trams, etc., the loss in the entire industry can reach up to almost CZK 13 billion. Such an amount can save the industry. If this does not happen, 2021 will be the year of the small-service providers' bankruptcy in the passenger transport segment.


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