Thursday, 17 April 2014

Czech, Slovak railway freight companies might merge

2 January 2013

Prague, Brno, Jan 1 (CTK) - Czech railway freight company CD Cargo and Slovak company Zeleznicna spolocnost Cargo Slovakia (ZSCS) could merge, Czech Prime Minister Petr Necas and his Slovak counterpart Robert Fico said in discussion programme Questions on Czech TV yesterday.

Both companies have financial problems and the possibility was talked about in the Czech Republic as well as in Slovakia in the past already.

"With the competition that now prevails on the European market, it becomes clear again that we need strong joint companies. Small railway freight companies are unable to survive. We can see it in Slovakia, we have serious economic problems with this company," Fico said, adding that he was prepared to back such project.

Necas believes that restructuring would have to be a part of such plan due to the poor financial situation of both companies. Restructuring could precede the merger or be part of it, he added.

"A strong player would thus emerge in Central Europe, it would be one of the four to five strongest railway freight companies in the whole Europe. We really are under pressure from the side of Russian as well as German transport companies," Necas remarked.

CD Cargo is in danger of becoming insolvent and a restructuring plan is to save it. The company wants to sell 87 locomotives and intends to scrap almost 5,000 goods wagons. It is also thinking about laying off up to 2,220 employees.

CD Cargo now has some 9,500 employees. It owns almost 30,000 wagons but most of them are in a poor condition and out of use.

The company will hold talks with the unions about the extensive layoffs. The unions are concerned that the layoffs will not help it break even and argue that the company will lose a large part of its sales as well.

CD Cargo estimates last year's operating loss at Kc230m, mainly due to the transport of individual consignments which has been loss-making in the long term. CD Cargo as the national railway freight company has to transport these consignments.

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