The German Railways (Deutsche Bahn) continue their battle against ever increasing costs and it seems this is forcing their top man, Ruediger Grube, to again look at means of generating more cash flow.

Will Deutsche Bahn’s initials be taken off the Schenker flag soon?  /  picture: hs
Will Deutsche Bahn’s initials be taken off the Schenker flag soon? / picture: hs

The news hit the street last Friday evening in a report posted by the VerkehrsRundschau that the DB boss may now be seriously looking at the option of disposing of part of the large DB Schenker Logistics daughter company.
It is expected that Herr Gruber will officially present this option in todays (Monday) Board of Directors meeting.
It seems that the board is already in the picture, having apparently been informed that Gruber is going suggest that at least 20 percent of DB Schenker Logistics be sold to a third party.

The costs are running high
If the above comes about then it‘s a surprising move and one which hardly anyone in the past months reckoned with.
It looks like the Deutsche Bahn management is forced to look at selling off some of its best table silver due to the fact that the concern is fighting a high debt and costs which instead of going down are rising dramatically.
One of the high cost issues is the acquisition of new high speed ICE trains which have increased the budgeted costs for the coming years from 17 to 21 billion euros.
This is a long way from the 10 billion euro border set by Mr Gruber himself when he took over office as DB‘s head man.

The German government, as owner of Deutsche Bahn is said to have signalised that although it is willing to accept an increased cost to keep the rail system up-to-date, that it expects the managers to take care themselves of all other costs related to the DB concern.

Between a rock and a hard place
So, it certainly seems that there is money needed in order to keep the debts on an acceptable level. Last year was also not a good one for Deutsche Bahn as the results fell far below those targeted 2014.
The Deutsche Press Agency (dpa) reports that from January to May of this year DB reached an Ebit of only €626 million. A large drop compared to the same period in 2014 which showed an Ebit of €865 million.
It can therefore be expected that DB will by no means reach the Ebit result of 2014, namely €1.8 billion. Even that figure was way below the €2.5 billion reached in 2012.

Arriva and DB Schenker part sell off?
It is likely that Mr Gruber will propose to his board members today that not only part of DB Schenker Logistics should be put up for sale, but also part of the UK based Arriva transport company which formerly belonged to the Cowies group of companies and which DB acquired for €2.8 billion in August of 2010.

Richard Lutz, the DB financial director is expected to take over the running of both DB Schenker and Arriva, thereby it seems giving Deutsche Bahn the needed flexibility of disposing of further shares of both companies, if and when needed in the future.
It is said that although the above is distinct possibility, that there so far have been no negotiations with possible buyers.

Alexander Hedderich  /  courtesy DB
Alexander Hedderich / courtesy DB

DB Schenker-Rail chief to vacate his post.
At least that is the information being leaked out through the head office.
Alexander Hedderich who took up the position as helmsman at DB Schenker-Rail in September 2009 is expected to give up his position by August of this year.
The news from internal sources is that his position will be taken up by Berthold Huber who is already a member of the DB board of directors.

It will be interesting to see if Mr Gruber will actually push these plans through today and what the outcome and reactions will be at tomorrow‘s half-year press conference.
One thing is clear - Deutsche Bahn needs to start earning money before they be forced to sell off even more of the table silver.

John Mc Donagh

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