Deutsche Bahn forms much-debated support pact with state
The German government, Deutsche Bahn and a railway union have agreed to cooperate in order to support the rail freight industry. The partners announced an “Alliance for our Railway”.
The agreement was announced on 26 May by federal transport minister Andreas Scheuer, CEO of Deutsche Bahn Richard Lutz, the provisional chairman of the Railway and Transport Union (EVG) Klaus-Dieter Hommel and Deutsche Bahn’s Group Works Council member Jens Schwarz. All parties made significant commitments.
As part of the alliance, the federal government guarantees to continue the planned investments in the existing network, new construction and expansion as well as the technological renewal of the overall system. In this way it aims to continue to promote a modal shift in the transport sector and provide significant support for the climate targets.
In return, the Deutsche Bahn (DB) board of management will not be paid bonuses in 2020. Accordingly, this should result in savings “in the three-digit million range”. The organisation is also bound to cut other costs, saving another 4 to 5 billion euros. The unions, in turn, agree to the key points for a collective agreement if jobs are safeguarded in return.
According to media reports, DB will also be permitted to obtain additional loans, while the budget committee of the German parliament will be asked to agree an increase in DB’s debt ceiling of 25 to 30 billion euros. Furthermore, the federal government is willing to consider an equity increase for the company, which could amount to 6.7 billion euros. This is still subject to approval by the European Commission.
The alliance is not welcomed by all parties, as some consider it state aid to a single company, rather than for the rail freight sector at large. “Aid for Deutsche Bahn should be limited to corona-related damage for competitive reasons, the inspectors write in it. The federal capital injection should not be used to finance past bad investments”, the Federal Audit Office responded in a report.
Similar criticism was expressed by the Mofair association, in which the rail competitors in the rail transport sector are united. Matthias Stoffregen, managing director of the association was reported saying that the “federal funding for Deutsche Bahn could plug old holes”.
Earlier this month the German state-owned railway company said to expect losses of between 11 and 13.5 billion euros in revenues over the next four years due to the corona crisis. The German federal government and Deutsche Bahn announced earlier to be working on a financial support package of approximately 8 billion euros. The cooperation between the company and the state was criticised at that point too.