Germany plans to inject up to $7.57 billion in rail operator

Germany plans to inject up to 7 billion euros ($7.57 billion) into Deutsche Bahn as a part of a rescue plan for the state-owned rail operator, which has been hit by the coronavirus crisis, a document seen by Reuters showed on Monday.

That would cover more than half of the impact from a slump in demand for travel amid the pandemic, which Deutsche Bahn estimates at 11 billion to 13.5 billion euros through 2024, a proposal by Deutsche Bahn and the German transport and finance ministries showed.

The travel sector has been among the hardest-hit by the global outbreak, and while trains have not been halted in Germany, Deutsche Bahn says the number of passengers on long-distance routes is at only around 10-15% of normal levels.

The rail operator is also putting on ice plans for a stock market flotation of its international passenger transport business Arriva and slashing costs in Germany by up to 5 billion euros, the document said.

The document also includes a proposal for Deutsche Bahn to issue 3 billion euros in regular bonds this year instead of initially planned hybrid bonds, for which financing conditions would be less favourable in the current environment.

A first tranche of the government injection worth 4.5 bln euros is to be transferred in the coming weeks, though the European Commission still needs to approve the proposal, which might raise competition issues for the EU railways sector.

A finance ministry spokesman said on Monday no decisions have been taken on how to help Deutsche Bahn to deal with the pandemic impact.

Meanwhile, Germany reported on Monday that new coronavirus infections were accelerating exponentially after early steps to ease its lockdown, news that sounded a global alarm even as businesses opened from Paris hair salons to Shanghai Disneyland.Germany’s Robert Koch Institute reported that the “reproduction rate” - the number of people each person infected with the coronavirus goes on to infect - had risen to 1.1. Any rate above 1 means the virus is spreading exponentially.

German authorities had taken early steps to ease lockdown measures just days earlier, a stark illustration that progress can swiftly be reversed even in a country with one of the best records in Europe of containing the virus so far.

It follows a new outbreak in night clubs in South Korea, another country that had succeeded in limiting infections.

Governments around the world are struggling with the question of how to reopen their economies while still containing the coronavirus. In Europe, the world’s worst-hit continent, Spain and France began major steps to ease lockdowns, while Britain announced more cautious moves.

Traffic flowed along the Champs Elysees in Paris, a giant tricolore flag billowing under the Arc de Triomphe, as workers cleaned shop-front windows to reopen.“Everyone’s a little bit nervous. Wow! We don’t know where we’re headed but we’re off,” said Marc Mauny, a hair stylist who opened his salon in western France at the stroke of midnight when new rules took effect.

Reuters