May 11, 2020 / 12:40 PM / 20 days ago

Germany to inject up to 7 billion euros in rail operator: document

BERLIN (Reuters) - Germany plans to inject up to 7 billion euros ($7.57 billion) into Deutsche Bahn [DBN.UL] 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.

Reporting by Markus Wacket; Writing by Riham Alkousaa; Editing by Maria Sheahan

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