Virus pushes Deutsche Bahn into worst-ever financial crisis

German rail group Deutsche Bahn said Thursday it has plunged into its deepest financial crisis with a huge first half loss of 3.7 billion euros as the coronavirus pandemic slammed the brakes on travel.

Revenues collapsed by 11.8 percent compared to the same period last year to 19.4 billion euros ($22.8 billion), leaving operating losses at 1.8 billion euros for January to June.

“Covid-19 put an abrupt stop to the successful growth we were seeing, and plunged DB into the worst financial crisis in its history,” said the group’s chief executive Richard Lutz.

After a devastating March and April, when commuter traffic shrivelled up as offices, factories and shops closed to prevent transmission of the virus, demand in its home market Germany has improved since May, said the group.

However, Deutsche Bahn said it had to book a huge charge of 1.4 billion euros at its subsidiary DB Arriva, which handles passenger transport in Europe, including in markets among the worst-hit in the pandemic.

The subsidiary “had long been grappling with Brexit and with challenging developments on the British rail market”, it said.

“The Covid-19 pandemic, which came on top of these challenges, had a particularly serious impact on DB Arriva because the company does business in the UK, Italy, Spain and other countries that were hit especially hard.”

Nevertheless, the rail operator said it invested a record 5.6 billion euros during the period on its modernisation and expansion programme.

With Germany seeking to slash its carbon output, getting citizens to ditch cars for public transport has become a key priority.

To that end, Chancellor Angela Merkel’s government has signed a deal with Deutsche Bahn to offer it 62 billion euros in investments by 2030, while the rail operator matches the effort with 24 billion.

Berlin has also stepped in with 5 billion euros in aid to help Deutsche Bahn stay on the rails during the peak of the coronavirus pandemic.

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