German railways launches investment plan after winter chaos

By Andrew McCathie Jan 11, 2011, 16:30 GMT

Berlin - Like many Germans at Christmas, Mascha Poerzgen planned to spend part of the festive season criss-crossing the country visiting family and friends.

But for Poerzgen her plans rapidly turned into 'a rail disaster' as sub-zero temperatures and heavy snowfalls lead to mass delays or cancellation of services in what is one of the busiest travel times of the year.

Indeed, the rail chaos unleashed by the harsh winter weather seems to have brought to a head the deepening sense of frustration and anger in Germany about the nation's state-owned rail company, Deutsche Bahn AG.

So far more than 100,000 rail travellers have applied to Europe's biggest railway company to have their tickets reimbursed due to the breakdown in services over the last few weeks. Deutsche Bahn carries about two billion passengers each year.

For a nation like Germany, which prides itself on having world- class infrastucture, the claims about Deutsche Bahn's failures appear to be particularly galling.

'We want that as much as possible is invested in the rail system because we have an investment blockage,' said Joerg Vogelsaenger, transport minister for the state of Potsdam.

This week Deutsche Bahn chief Ruediger Grube faced the wrath of lawmakers from Berlin's regional parliament while the nation's state and federal transport ministers met to discuss the woes that have hit the Berlin-based rail company.

Deutsche Bahn also operates Berlin's suburban rail network, which has recently been engulfed by technical problems that are likely to cost the company about 700 million euros (904.6 million dollars) over the next three to four years.

Any hopes of raising new capital through a partial privatization of Deutsche Bahn have long faded as a possible sell off of shares in the group has disappeared from Berlin's political agenda.

Instead Transport Minister Peter Ramsauer has raised the possibility of the 500 million euros Deutsche Bahn pays annually as dividends being pumped largely into transport projects.

But the finance ministry in Berlin has rejected calls for Deutsche Bahn to use the dividend to invest in its rail services as the company battles to restore its public image.

Defending his company, Grube insisted this week that air travellers had also been hit by the fierce winter weather.

However, Deutsche Bahn has not just run into difficulties during the winter months. About 27,000 rail travellers claimed compensation totalling nearly 4 million euros after the air conditioning failed on about 27 trains at the height of a heat wave last summer.

The 59-year-old Grube conceded that the Bahn might not have done enough to prepare for what he described as an 'extreme situation' over winter. He also went on to say: 'It is no secret that the Bahn's infrastucture is underfinanced.'

The response from the company was to roll out plans to invest 44 billion euros over the next five years.

By the end of the year about 700 railway points are to be protected from icy weather with special new heating devices.

   More than 700 passengers were forced to spend a large part of the night on five trains stuck between Berlin and Hanover on Christmas eve after the wiring for the rail network iced up.

Still, some believe that Deutsche Bahn's plans fall short of what is really needed.

'I think we will have to go beyond the 44 billion euros,' said Vogelsaenger.

The chairman of the German parliamentary committee, Winfried Hermann has called on Deutsche Bahn to focus on its domestic demand.

'The company needs every cent to invest in better equipment,' he told the Berlin daily Tagesspiegel last month.

This could include Deutsche Bahn abandoning for the time being one of its most prestigious projects - an intercity express to London from 2013.

But then the winter breakdown of Deutsche Bahn's services in parts of the nation capped a tough few years for the group.

For months Deutsche Bahn has faced an army of protestors over its moves to build a new rail project costing over 4 billion euros in the southern city of Stuttgart.

Grube took over as Deutsche Bahn chief in May 2009 after Hartmut Mehdorn resigned the post in the wake of a scandal over the handling of employees personal data.

Mehdorn also regularly came under fire during his term as Deutsche Bahn chief. This included his handling of a rancorous 11-month wage campaign by rail engine drivers about three years ago.