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Deutsche Bahn on the brink: Emergency measures and Billion-Euro debts unveiled!

Deutsche Bahn on the brink, financial news

Deutsche Bahn, the state-owned railway company of Germany, is currently developing a comprehensive plan to implement cost-reduction strategies. This initiative is in response to the substantial financial strain the company is facing, characterized by losses in the range of billions of euros and a considerable escalation in its debt levels. The insight into these developments comes from two individuals associated with the company, who conveyed this information to Reuters.

The critical financial situation at Deutsche Bahn has reached a point where drastic measures are deemed necessary. One of the sources within the company likened these proposed cost-cutting actions to an "emergency brake," indicating the severity and urgency of the situation. The company has been grappling with a multitude of challenges, including ongoing labor disputes leading to strikes, the need to increase wages, and the critical requirement to modernize its infrastructure, which is currently outdated and in need of significant upgrades.

As part of the cost-saving initiative, Deutsche Bahn plans to implement strict controls over staffing and expenditure. The company will require that any new recruitments and all forms of expenditure, notably including costs associated with business travel, must receive explicit approval from higher management. This step is a significant departure from previous practices and indicates a move towards tighter financial management and oversight within the company.

A spokesperson within Deutsche Bahn disclosed that the company is preparing to enforce a comprehensive hiring freeze, along with a near-total freeze on spending across most of its business sectors. This information indicates a dramatic shift in the company's financial management strategy, signaling a move towards stringent austerity measures in an attempt to stabilize the company’s precarious financial situation.

The planned austerity measures, however, will not affect Schenker, the logistics subsidiary of Deutsche Bahn. Currently, Schenker is in the process of being sold, which exempts it from the upcoming financial constraints. This decision to exclude Schenker from the cost-cutting measures suggests a strategic approach in handling different arms of the company, perhaps due to the potential financial benefits of the sale.

A representative from Deutsche Bahn confirmed that while the company's management board has yet to reach a final decision, preparations are underway to substantially cut back on administrative costs and new hiring. This move is in response to the company's financial performance in the current year, which has not met projected expectations, necessitating a review and revision of financial strategies.

The internal sources at Deutsche Bahn indicated that a decision regarding the implementation of these cost-saving measures could be taken very soon, potentially as early as the next Tuesday. This timeline suggests a sense of urgency and swift action by the company in addressing its financial challenges.

The financial difficulties facing Deutsche Bahn are starkly illustrated by its 2023 performance, which saw the company incurring a net loss close to 2.4 billion euros, roughly equivalent to 2.60 billion U.S. dollars. Furthermore, the company's net financial debt has experienced a significant surge, reaching 34 billion euros! These figures highlight the severity of Deutsche Bahn's financial woes and underscore the critical necessity for the cost-cutting measures under consideration.



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