German govt announces $6 bln rescue package for rail operator

Germany's government said it plans to inject at least 5.5 billion euros ($6 billion) into state-owned rail operator Deutsche Bahn, which has been hit by the collapse in travel due to the coronavirus crisis. Employees will contribute a further 2 billion euros up until 2024 and a debt cap will be lifted, it said on Tuesday.

The firm is looking to borrow up to 8 billion euros this year alone, according to a draft document prepared for the supervisory board and seen by Reuters. Deutsche Bahn is trying to plug a budget hole of between 11 billion to 13.5 billion euros through 2024.

While trains have continued to run during the pandemic, Deutsche Bahn says the number of passengers on long-distance routes is at only around 10-15% of normal levels. The plan needs to be approved by the German parliament and the European Commission, given competition issues for the railways sector.

The government and trade unions have not yet finalised details of the contribution of employees to the package as the company has ruled out dismissals, meaning savings can only come from wage freezes or longer working hours. ($1 = 0.9113 euros)