GregWTravels
Active Member
On board with the rail barrons
Eric Reguly, July 24, 2007 at 11:21 AM EDT
Rail businesses are suddenly hot commodities. In Canada, Canadian Pacific rebuffed an approach from Brookfield Asset Management and is probably in play. Canadian National admits to having considered splitting itself into real estate and train operating companies.
The rail scene is even hotter in Europe, where Deutsche Bahn (DB), the German national rail company, is on the verge of partial privatization. The German government wants to sell about 25 per cent of DB some time next year by way of initial public offering or direct placement to investors. The government says the 25 per cent stake is worth at about €3-billion, the equivalent of $4.3-billion (Canadian).
DB is a huge transport company. In 2006, it had revenue of €30-billion and an operating profit of €2.5-billion. It owns and operates 34,000 kilometres of track and almost 4,200 rail stations. It has 80 subsidiaries and sea, trucking and air freight operations around the world. Freight accounts for half of its sales. It has 229,000 employees and last year carried 1.85-billion passengers.
Why does DB want to join the stock market? Partly, it appears, because it can. For years, DB was a chronic money loser. Under CEO Hartmut Mehdorn, it has become profitable and is turning into a powerful international business. Another reason is rail liberalization. In 2010, the European rail market will be opened to competition. DB needs access to capital to fight this war. It wants to spread its high-speed trains, known as ICE, all over Europe before SNCF, the French national railway company, gets a chance to do the same. Both DB and SNCF know they are vulnerable to cheap competitors. Rail versions of discount airlines like Ryanair and EasyJet could emerge.
The competition is good news for travellers. European passenger rail service is superb by North American standards and is getting better as billions of dollars are pumped into high-speed service. The fastest electric trains travel at 320 km/hr. A new high-speed line just opened between France and Germany. The Paris to Stuggart run used to take 6 hours. Now it takes 3 hours and 40 minutes. Three other fast lines are opening by the end of next year. When they’re finished, the London to Paris run will take a mere 2 hours and 20 minutes. Why bother flying?
Europe, of course, has the high population densities and relatively short distances that make high-speed trains an attractive proposition. Still, it’s a pity Canada doesn’t get into the game with a high-speed network that links Toronto, Ottawa and Montreal. Bombardier, the maker of many of fast trains used in Europe, would be happy to oblige. With oil prices rising, highways getting more crowded and carbon dioxide reduction becoming a priority, high-speed electric trains have a bright future in Europe. They could, too, in Canada.
http://www.theglobeandmail.com/servlet/story/RTGAM.20070724.WBwreguly20070724112129/WBStory/WBwreguly
Eric Reguly, July 24, 2007 at 11:21 AM EDT
Rail businesses are suddenly hot commodities. In Canada, Canadian Pacific rebuffed an approach from Brookfield Asset Management and is probably in play. Canadian National admits to having considered splitting itself into real estate and train operating companies.
The rail scene is even hotter in Europe, where Deutsche Bahn (DB), the German national rail company, is on the verge of partial privatization. The German government wants to sell about 25 per cent of DB some time next year by way of initial public offering or direct placement to investors. The government says the 25 per cent stake is worth at about €3-billion, the equivalent of $4.3-billion (Canadian).
DB is a huge transport company. In 2006, it had revenue of €30-billion and an operating profit of €2.5-billion. It owns and operates 34,000 kilometres of track and almost 4,200 rail stations. It has 80 subsidiaries and sea, trucking and air freight operations around the world. Freight accounts for half of its sales. It has 229,000 employees and last year carried 1.85-billion passengers.
Why does DB want to join the stock market? Partly, it appears, because it can. For years, DB was a chronic money loser. Under CEO Hartmut Mehdorn, it has become profitable and is turning into a powerful international business. Another reason is rail liberalization. In 2010, the European rail market will be opened to competition. DB needs access to capital to fight this war. It wants to spread its high-speed trains, known as ICE, all over Europe before SNCF, the French national railway company, gets a chance to do the same. Both DB and SNCF know they are vulnerable to cheap competitors. Rail versions of discount airlines like Ryanair and EasyJet could emerge.
The competition is good news for travellers. European passenger rail service is superb by North American standards and is getting better as billions of dollars are pumped into high-speed service. The fastest electric trains travel at 320 km/hr. A new high-speed line just opened between France and Germany. The Paris to Stuggart run used to take 6 hours. Now it takes 3 hours and 40 minutes. Three other fast lines are opening by the end of next year. When they’re finished, the London to Paris run will take a mere 2 hours and 20 minutes. Why bother flying?
Europe, of course, has the high population densities and relatively short distances that make high-speed trains an attractive proposition. Still, it’s a pity Canada doesn’t get into the game with a high-speed network that links Toronto, Ottawa and Montreal. Bombardier, the maker of many of fast trains used in Europe, would be happy to oblige. With oil prices rising, highways getting more crowded and carbon dioxide reduction becoming a priority, high-speed electric trains have a bright future in Europe. They could, too, in Canada.
http://www.theglobeandmail.com/servlet/story/RTGAM.20070724.WBwreguly20070724112129/WBStory/WBwreguly