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Deutsche Bahn sees big windfall from climate change package

Deutsche Bahn sees big windfall from climate change package
FILE PHOTO - Trains of German railway Deutsche Bahn arrive at the main train station in Frankfurt, Germany, March 27, 2019. REUTERS/Kai Pfaffenbach -
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KAI PFAFFENBACH(Reuters)
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BERLIN (Reuters) – Germany’s Deutsche Bahn expects the government’s 50 billion euro climate change package to generate the railway company’s biggest growth spurt in its 180-year history, the state-owned firm’s boss said on Sunday.

In a telephone press conference, Richard Lutz said the measures announced on Friday, including a cut in value-added tax (VAT) on train tickets, would give it an additional 20 billion euros (£17.66 billion) in revenue by 2030.

Although the package, in response to growing public concern about the impact of climate change, disappointed climate activists, individual measures such as surcharges on domestic flights and the VAT cut are expected to have an impact on the companies concerned.

“We are now on the attack and rebuilding,” he said. Europe’s railway companies are expected to be major beneficiaries of a shift away from car and air transport towards public transportation offerings that emit proportionally less carbon.

The company planned to buy 30 new high-speed trains by 2023 to cater for the expected growth in passenger numbers, a one billion euro bonanza for train-building companies.

The railway’s current ICE-4 trains are built by Siemens <SIEGn.DE> and Bombardier <BBDb.TO>, but Lutz said the new units would not be of the same type. France’s Alstom <ALSO.PA> is another potential supplier.

Financially strained Deutsche Bahn, which has been under fire over delays and for having insufficient capacity, said it would invest 11 billion euros of the extra cash in recapitalising. Despite running at a profit, the company has had to take on extra debt to finance investment.

Deutsche Bahn operates Europe’s largest railway by track length, though at 39,000 km it is far shorter than at its peak length of 58,000 km.

(Reporting by Markus Wacket, writing by Thomas Escritt; editing by David Evans)

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