Deutsche Bahn plans massive savings program
Published on: 07 Mar 2009 12:45 CET
The railway operator has not yet named an exact sum it plans to save, though the savings plan is expected to be finalized by the end of March, the newspaper reported.
The railway operator has already taken 35,000 freight cars out of service as the German and European economies sink further into recession. The company is also considering a hiring freeze and possible layoffs for workers in its regional train services. Business conditions have worsened so dramatically that the company has refused to issue profit estimates for 2009.
“We must adjust to these changing positions and react decisively,” Bahn CEO Hartmut Mehdorn told the Tagesspiegel. The company carries a heavy debt load and interest payments are having a “heavy impact” on the firm. The newspaper cited sources who said, “every post stamp will be scrutinized,” as part of the cost-cutting measures.
The company had been extremely profitable, reporting a €1.7 billion profit in 2007. Financial results for 2008 have not yet been announced. In December, Deutsche Bahn announced a 3.9 percent price increase on tickets and discount cards.
The government tried to partially privatize the railway last year, but had to shelve plans after the financial crisis wreaked havoc on global stock markets, limiting the government’s potential earnings from a sale. Deutsche Bahn planned to use some of the money it made from an initial public offering to expand further across Europe. In the past year and a half, the company has purchased stakes in British, Polish and Spanish rail operators.