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CD Cargo to split

29 Aug 2007

ON JULY 25 the Czech cabinet approved plans to hive off CD's freight business as an independent subsidiary CD Cargo. Target date for the split is April 1 2008, subject to the legislation being passed by parliament in November.

The move will complete a railway restructuring programme started in 2005, which is aimed at meeting EU rules prohibiting the cross-subsidy of loss-making passenger traffic from freight revenues.

Around 13 000 of CD's 55 000 staff will transfer to the freight company, along with 10% of the railway's assets. In December the cabinet plans to discuss the introduction of a strategic partner into CD Cargo, which it hopes will bring in capital for rolling stock modernisation. A minority stake would initially be sold, raising around KC12bn.

On January 1 2008 CD will transfer all infrastructure maintenance and operations to SZDC, together with more than 11 000 staff. Until now, the operation, maintenance and development of the infrastructure had been contracted back to the train operator.

Last month CD announced a profit of KC31m for the first half of 2007, which is the first since it was formed in 1993. Compared to the same period in 2006, passenger-journeys grew by 1·8 % to 93·6 million and revenue by 15·1% to KC360m. Freight traffic improved by 6·1% to 44·8 million tonnes, generating a profit of KC709m, which was up 8·7%. For the whole year, CD expects to make a profit of KC50m, compared with a KC450m loss last year, thanks in part to higher payments from the Ministry of Transport to support regional passenger services.