Deutsche Bahn Reports Significant Losses in 2024 Amidst Ongoing Crisis

The Deutsche Bahn, Germany's state-owned railway company, has reported a staggering loss of approximately EUR1.8 billion for the fiscal year 2024, marking a continuation of its financial difficulties. This loss, while still significant, is nearly EUR1 billion less than the previous year's results, indicating some potential for improvement.

The company's operational loss, adjusted for inflation, amounted to around EUR333 million before interest and taxes (EBIT), which represents a decrease of about EUR1.8 billion compared to the prior year. This improvement can largely be attributed to the federal government's intervention to cover substantial costs related to essential maintenance tasks that the railway undertook in 2023.

Despite these efforts, the Deutsche Bahn remains in the red, primarily due to the sale of its logistics subsidiary, DB Schenker, to the Danish competitor DSV. Historically, DB Schenker has been a significant profit generator for the parent company, contributing approximately EUR1 billion in operational profits even during 2024. However, the benefits from this subsidiary will no longer accrue to the Deutsche Bahn, as the sale is expected to be finalized this year.

The proceeds from the sale, estimated at EUR14.3 billion, are intended to help reduce the company's substantial debt load. Last year, the total debt decreased slightly by EUR1.4 billion, bringing the total liabilities to EUR32.6 billion. The Deutsche Bahn aims to further trim its financial obligations to a range between EUR26 billion and EUR28 billion by 2027.

Company CEO Richard Lutz has described the current situation as the most severe crisis since the railway's reform, emphasizing the urgent need for a turnaround strategy. The punctuality of long-distance services has plummeted to a historic low of only 62.5%, and the state of the rail infrastructure is reported to be in disrepair and overburdened. Lutz acknowledged that the railway is far from meeting the expectations of its customers or its operational goals.

In response to these challenges, a comprehensive restructuring program is underway, focusing on operations, infrastructure, and financial stability. The modernization of the core network is already in progress, and Volker Wissing, the acting Federal Minister of Transport, has called for a continued overhaul of the Deutsche Bahn. Wissing noted that the financial results for 2024 underscore the pressing need for effective implementation of the company's economic recovery plan.

Wissing remarked that the numerous crises faced by the railway in recent years have left lasting impacts on its financial health. He affirmed that despite the considerable challenges, it is crucial for the Deutsche Bahn to stabilize its core operations, with ongoing efforts to enhance infrastructure as part of the recovery plan.

Additionally, the railway has initiated a significant reduction in workforce, particularly in administrative roles, with plans to cut approximately 10,000 jobs by the end of 2027, compared to 2024 levels. The goal is to improve operational punctuality in long-distance services, aiming for a target of 75% to 80% by 2027. The company is also optimistic about achieving operational profitability within the current fiscal year.