THE poor quality of infrastructure is cited by German Rail (DB) as having a major impact on its economic performance in 2024 when DB reported an operating loss of €333m and an overall loss of €1.8bn. Revenue remained static at €26.2bn.

DB says the operating loss was reduced by around €1.8bn compared with 2023, partly due to compensation payments from the federal government to cover disruption caused by infrastructure work. A punctuality score of just 62.5% for long distance services, down from 64% in 2023, led to additional burdens on earnings, according to DB.

Strikes by drivers in the first quarter of 2024 and the generally weak state of the German economy also had a negative impact, particularly on rail freight, with DB Cargo reporting an operating loss of €357m despite increasing its adjusted Ebit by €140m. The result emphasises the challenge DB Cargo faces to become profitable by the end of 2026 after the European Commission (EC) approved in December 2024 a €1.9bn state aid package by the German government with this condition.

Around 1.9 billion passengers used DB trains in 2024, an increase of 1.6% on 2023. Overall passenger traffic increased by 2.1% to around 85 billion passenger-km, a result driven by the popular Deutschlandticket, which offers unlimited use of regional services for a monthly flat fee of €58. DB Regio reported a profit of €108m following a 5.9% increase in revenue, recording a total of 46.9 billion passenger-km during the year.

Operating performance declines

However, overall operating performance on the DB network fell by 1.3% to 1.1 billion train-km, primarily due to infrastructure work, with DB instituting months-long blockades of some routes to enable work to take place uninterrupted. Worsening punctuality caused by disruption-prone infrastructure and other restrictions led to a 3% fall in long-distance performance to 44.1 billion passenger-km in 2024 compared with 2023. Long-distance revenue fell by €50m and despite countermeasures, the long-distance operating loss increased from €43m in 2023 to €96m last year.

“DB is facing the biggest crisis since railway reform,” says CEO, Richard Lutz. “In key areas, we are far from achieving our goals and what our customers expect from us.

“To overcome this crisis, we have launched S3, a comprehensive programme to rehabilitate our infrastructure, operations, and profitability. The initial results show that bold, new approaches and disciplined implementation are paying off.”

Among the measures taken to reduce operating expenses by €300m was the cutting of around 1000 sales and administration roles, with DB aiming to have 10,000 fewer employees by 2027 compared with 2024. The railway currently employs around 216,000 people in Germany.

Overall net debt fell by €1.4bn to €32.6bn by the end of 2024. The figures for 2024 do not include logistics subsidiary DB Schenker, which recorded a profit of more than €1bn in 2024, ahead of its sale to Danish group DSV, which will be confirmed this year. The 2024 results also exclude, Arriva, which DB sold to global infrastructure investment manager I Squared last June.

"The Schenker sale will reduce our debt and interest burden," says DB CFO, Levin Holle. “This will allow us to better focus on our core business, the railway.”

Investment

While performance has lagged, DB says it invested a record €18.2bn in 2024, primarily in infrastructure and based on significantly increased federal funding. Self-financed net investment also increased by 11.3% year-on-year to €5.9bn.

Looking ahead to 2025, DB says it is concentrating on achieving the restructuring goals outlined in S3. It expects gross investment in infrastructure upgrades to exceed €20bn during the year while self-financed investment will increase to more than €6bn. DB also plans to push ahead with reducing it staff headcount, especially in administrative roles.

Overall, DB expects revenue to exceed €27bn and the operating result to return to profit in 2025. Net financial debt is expected to fall to €26-28bn, while DB hopes that long-distance punctuality will exceed 65%, and potentially hit 70%, once again.