DB mostly points to infrastructure in 2027 business plan

Deutsche Bahn (DB) is launching a restructuring and business plan. The rail operator wants to improve infrastructure, punctuality and its finances during the next three years. The company’s rail freight subsidiary, DB Cargo, has a restructuring plan separately from its parent company.

The plan, which carries the name “S3”, places great importance on infrastructure as a point of improvement. DB says that “the focus will be on rapid renovation of existing infrastructure.” A total of 1,500 kilometres of track, which includes all previously-announced corridor renovations, will be modernised.

“Furthermore, systems that are susceptible to failure are to be replaced throughout the infrastructure, thus significantly reducing the number of slow-speed sections”, DB says. The measure, among other planned improvements, is supposed to reduce infrastructure-related delays by 20 per cent.

New construction timetable system

In addition, DB wants to stabilise train timetables, and infrastructure renovations play a key role in this. “The entire construction and maintenance system is being converted into a so-called synchronised system. The aim is for construction sites to follow the timetable over specified time windows in the future, rather than the other way around, as is the case today”, writes DB.

Ultimately, the German rail operator wants to improve its annual financial performance. In 2023, the company had an EBIT of -964 million euros. By 2027, it aims to have a positive result with an EBIT of 2 billion euros. Once again, DB points to infrastructure modernisations as an important factor in improving the finances overall.

However, infrastructure is not everything. Spending will also be reduced, which includes fewer investments. “The so-called repayment coverage, i.e. the ratio of operating cash flow to adjusted net financial debt, is to be increased to 12 percent in three years. The personnel expense ratio is to be reduced from 52 percent today to 50 percent”, DB says. “The investment ramp-up, particularly in the transport areas, will be adjusted and reduced compared to previous plans.”

“Old wine in new bottles” at Deutsche Bahn

The business plan surfaced in media earlier this month before its official announcement. At the time, many insiders expressed their skepticism surrounding the plan’s stated goal of a 2 billion euro profit by 2027. They reportedly considered it to be unrealistic, and called it “old wine in new bottles”, pointing to DB Cargo’s losses as an obstacle to profitability.

Besides infrastructure and construction improvements, DB’s general restructuring plan seems to look for a solution in passenger transportation more than anything. According to DVZ, CEO Richard Lutz also wants to grow commuter connections, redesign regional networks, grow internationally, shorten train turnaround times and reduce reserve high-speed ICE trains.

DB Cargo

DB’s lossing-making freight branch DB Cargo will also undergo restructuring to improve performance. The company will be divided up into three business units: The first will carry the name Rail Logistics. The second one will have two subdivisions, one for maritime combined transport and the other one for continental combined transport. “The sectors are responsible for the economic results of their services and quality”, DB explained earlier this year.

Both divisions will have rolling stock and personnel assigned to them. According to DB, this initiative should lead to “simpler processes and more efficient use of locomotives and personnel”, increasing productivity. One remaining question mark concerned traction services. “In the future, the sector units of DB Cargo will provide traction services with their own staff and production resources if this is profitable, otherwise they will be outsourced to external rail transport companies”, DB explained in July.