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Business

Breaks Slammed on Railway Privatization

Plans to privatize Germany's national railway, Deutsche Bahn (DB), ahead of national elections in 2006 have been stopped in their tracks after the supervisory board deemed the timeframe "unrealistic."

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The pace towards privatization could slow to a gentle chug

The signal change comes as a blow to the chief executive officer (CEO) of Deutsche Bahn, Hartmut Mehdorn, who has been steaming ahead with his goal of privatizing the railway. Now he is left with no choice but to drop down a gear.

"In light of the current basic parameters, a stock market flotation before the 2006 summer recess is unrealistic," said Michael Frenzel, who heads the DB's supervisory board. He added that a new date would be decided upon in conjunction with the government as the current owner of DB.

No plans to quit

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DB Chairman Hartmut Mehdorn

For his part, Mehdorn has made it clear that he continues to stay on as head of Deutsche Bahn.

"It's not about me, it's about securing DB access to the capital market, given that the government can't finance it long term," he told Reuters news agency. "It's almost ridiculous to make it into a personal issue."

The word from government circles is that his job is not in danger, but Dirk Fischer, CDU/CSU spokesman for transport policies believes Mehdorn's future is not so cut and dried.

"His recent behaviour leads me to believe there is some truth behind the rumors that his successor is waiting at the door," he told Berliner Zeitung.

Although the government is currently behind Mehdorn, he has become the object of hefty criticism, not only among politicians but also customers and company employees. In his attempts to lead Deutsche Bahn out of the red, thus demonstrating its readiness for floatation, the CEO has made a number of controversial decisions.

Internal dissent

Internally, he plans to increase the number of working hours and reduce wages in some regions. Externally, he intends to jack up the price of rail travel for the third time in the past twelve months.

Uhr Signal

Governement will work out a new time frame for privatization

The railway union, Transnet, is critical of Mehdorn's cavalier crusade to lead the Deutsche Bahn to privatization whatever the price.

"He who puts a freeze on spending, increases prices and cuts train routes can hardly be surprised at low levels of staff morale," said Transnet Head Norbert Hansen, who also declined to rubber stamp the privatization plans.

And the absence of the union's backing would render a DB stock market debut almost impossible.

"Without the trust of the employees, the floatation would be doomed to fail," Hansen wrote to Frenzel.

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