Germany discusses privatising Deutsche Bahn

29th August 2006, Comments 0 comments

29 August 2006, BERLIN - Key German political leaders met Tuesday to consider plans for selling off the nation's state-owned rail company, Deutsche Bahn AG. An agreement on a proposal to sell Deutsche Bahn would bring to an end a long-running political battle over the privatisation of the country's railways, which analysts estimate could be worth up to 15 billion euros (19.1 billion dollars). Deutsche Bahn is expected to make its stock market debut by the end of the decade. But senior government officials

29 August 2006

BERLIN - Key German political leaders met Tuesday to consider plans for selling off the nation's state-owned rail company, Deutsche Bahn AG.

An agreement on a proposal to sell Deutsche Bahn would bring to an end a long-running political battle over the privatisation of the country's railways, which analysts estimate could be worth up to 15 billion euros (19.1 billion dollars).

Deutsche Bahn is expected to make its stock market debut by the end of the decade.

But senior government officials were quick to reject earlier reports emerging from the meeting of the leaders of Chancellor Angela Merkel's ruling coalition that an agreement on the sale had been reached.

In particular, the party leaders have been discussing the details of the privatisation model for Deutsche Bahn which is likely to involve the company being listed on the stock exchange without its track network.

This means that while the Berlin-based Deutsche Bahn will be allowed to operate the track, the ownership for the network will remain in state hands.

The move reflects concern among both Germany's political leadership and rail executives about the problems which emerged in Britain after the operators of the rail company and the network were split.

Leading political figures have been battling it out for years over selling off the national railway company with Deutsche Bahn chief Hartmut Mehdorn over the details and timing of the sell off move.

The government has planned 2009 as a possible date for Deutsche Bahn to make its stock market debut.

But Mehdorn has been arguing that his company should be listed earlier, possibly in 2008.

Earlier this month, Mehdorn seized on Deutsche Bahn's strong financial performance during the first half of the year as helping to set the stage for its privatisation.

While first-half sales jumped 19 per cent to 14.5 billion euros, Deutsche Bahn said earnings before interest and taxes (EBIT) more than doubled to 936 million euros from 456 million in the same period in 2005.

Boosting the result was a big increase in cargo volumes which followed the acquisition of US freight and logistics company Bax Global.

As a result, Deutsche Bahn raised its 2006 EBIT to 1.9 billion euros from its previous forecast of 1.6 billion euros.

"With these great results, we have achieved the conditions for an initial public offering," Mehdorn said releasing the results.

DPA

Subject: German news

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