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According to a document entitled Dealing with the financial consequences of the coronavirus pandemic on DB, the government estimates that the financial impact of the pandemic on DB could reach between €11bn and €13.5bn by 2024.
The government is considering funding around 80% of the increased costs. The government’s equity stake in DB could be increased from €6.9bn to €8.4bn and DB’s current debt limit of €25bn would be raised. DB’s net financial debt was €24.2bn at the end of the 2019. In return, DB would contribute an estimated €5.1bn to plug the financial hole by cutting staff and materials costs, and delaying rather halting investment projects.
However, the financial package would have to be approved by the federal parliament, the European Commission, and DB’s supervisory board. According to Zeit Online, if the deal is approved, DB could receive an initial cash injection of €4.5bn, with more money by the end of the year. DB had hoped to raise additional funds from the sale of its Arriva subsidiary, however, this has been postponed indefinitely.
The financial package would be greater than that being considered for Lufthansa, and has faced criticism from opposition parties and pressure groups representing private rail operators.
DB has also been criticised for maintaining around 75% of its passenger services when traffic fell to 10-15% of the pre-coronavirus level. DB claims the services were needed to transport critical workers. But other operators have cut services much more than DB while still being able to cater for the remaining demand. DB’s freight business has also been hit, with a drop in traffic of around 40% according to Zeit Online.
According to the government document, DB could face a drop in revenue of €5bn this year – DB reported adjusted sales of €44.4bn in 2019. DB also faces additional costs for cleaning trains and stations.
The post German government considers massive aid package for DB appeared first on International Railway Journal.
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