Deutsche Bahn: New boss, old problems

Business

Back in the black

The rail operator's 2015 figures were in negative territory. Write-offs and the company's large-scale restructuring had driven the balance sheet into the red. A bottom-line profit of 716 million euros ($772 million) put Deutsche Bahn back on the success track last year.

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The new boss: Richard Lutz

New head train driver Richard Lutz (left), formerly chief financial officer, has taken over the company's reins from Rüdiger Grube (right). Grube had surprisingly resigned over disputes surrounding the extension of his contract.

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Constant change

The fundamental restructuring of Deutsche Bahn started two decades ago and is to continue under Lutz. Since 1994, the Deutsche Bundesbahn (German Federal Railway), which used to burn through billions each year, has transformed into a global mobility enterprise. The DB corporation now has 300,000 employees in over 140 countries.

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Impossible tasks?

Restructuring remains a balancing act, as DB needs to meet political demands and turn a profit. Even the most remote village is to be connected to the railway network, regardless of the number of passengers. Moreover, trains are supposed to be punctual and comfortable, all while keeping ticket prices affordable.

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Not confined to tracks

Trains don't suffice to be mobile on a global level. DB Arriva, for instance, operates buses on top of trains in several European countries. Logistics service provider DB Schenker, which employs 66,000 people in over 2,000 locations, manages DB's freight transport.

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Freight traffic remains problem child

DB intends to put an end to the crisis of its rail freight operations. In recent years, DB Cargo has logged losses due to inefficiency and failure to modernize its outdated fleet, Only around 17 percent of Germany's freight traffic is handled by rail.

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Costly prestige projects - a neccesity?

Large-scale projects like the major modification of Stuttgart's main train station (photo) have caused a big stir. Many residents of Stuttgart have protested against the mammoth project, and costs have exploded. DB is forced to contribute 3.5 billion euros out of its own pocket.

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Initial public offerings canceled

The flotations of DB subsidiaries Arriva and Schenker, which were supposed to inject new money into the corporation, were called off in late 2016. An estimated 4.5 billion euros needed for investments are now sorely missing. According to DB, the cancellations were due to uncertainty over Brexit.

New boss, new figures, many challenges: 2015 saw German rail operator Deutsche Bahn slip into the red. And even though CEO Richard Lutz boasts decent 2016 results, big challenges loom.

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