NS results for the first half of the year ‘dramatic’ due to the absence of passengers
NS transported even fewer passengers in the first half of 2021 than the company initially expected. Due to the lockdown announced by the cabinet in December, the number of passengers transported has fallen to more than a third of that before the corona crisis.
Before the pandemic, approximately 1.3 million people traveled by train on working days. In the first six months of this year, NS transported only 35 percent of that number of passengers. Over the whole of 2020, NS was on average at 40 percent; the rail company had counted on recovery before 2021.
Just like last year, the low numbers of travelers have led to “dramatic” financial results, NS said on Monday when the half-year figures were published. The transport company achieved a positive operating result only through financial support from the Dutch government and a windfall at the British NS subsidiary. That came to 389 million euros, compared to minus 52 million euros in the first half of last year.
Without the ‘availability fee’ that the Dutch government is now paying until at least 1 September 2022 – so that NS can continue to operate the timetable in full – and the results in the United Kingdom, NS’s operating result would have been negative at 601 million euros. The comparable result last year was minus 1.1 billion euros.
NS now transports more than 50 percent of the number of train passengers for corona, according to financial director Bert Groenewegen. “That is mainly social-recreational transport. We expect students and pupils to make full use of the train again next autumn. The universities and colleges, as it stands now, are taking more physical education into account. But it is still unclear to what extent commuting will return. The second half of the year will be very important for NS.”
The shortages up to and including 2024 could turn out higher for the NS
Groenewegen previously said that NS will lose an estimated 4.7 billion euros in revenue in the Netherlands up to and including 2024. Now he suggests that the deficits could turn out even higher.
The windfall in the United Kingdom concerns NS subsidiary Abellio. The British subsidiary (turnover in the first half of the year: 1.6 billion euros; NS in the Netherlands: turnover 1.4 billion) is dealing with a major reform of the British railways. Prime Minister Boris Johnson’s government wants more control over national rail transport. Instead of more or less independently operating commercial train companies, there will be one system in which more coordination (and more risk) will lie with the British Ministry of Transport. This should put an end to the fragmentation of British rail transport, about which passengers frequently complain.
The regional carriers, including Abellio, are being softly encouraged to buy out their transport contracts (for the performance of which they were previously paid) and to join the new regime. This leads to fewer risks and lower costs, according to Groenewegen. Those who do not buy off the contract will probably earn much less from train transport. The windfall is that the severance payment that NS now pays is lower than what the company had reserved for it.
Groenewegen does not yet want to answer the question whether NS should not leave the United Kingdom altogether. “Regional train transport in the UK does not add much for Dutch travelers. But we want to see how well the new system works before we decide whether to withdraw from the UK.”
NS is also faced with the question of whether it will maintain foreign activities in Germany. NS subsidiary Abellio Germany is active in five federal states for nine clients. However, regional train transport is of little benefit to NS. According to the Dutch company, this is partly due to high personnel costs, a lot of maintenance work and fines because Abellio – as a result of that maintenance – does not meet performance agreements. Groenewegen: “If we do nothing in Germany, we will have to deal with loss-making contracts until the end of the term.”
In May, Abellio Germany started preliminary insolvency proceedings through the German court. This allows the German NS subsidiary to reorganize in the lee. However, all important business decisions must then be submitted to a representative (trustee) of the court. In three to six months it should become clear what future NS still has in Germany.
Groenewegen is considering various options: new financing of the transport contracts, sale of the German activities or bankruptcy. “But then trains may come to a standstill and of course no one is waiting for that. Not even the regional clients.”
Unlike in the UK, Groenewegen sees advantages for Dutch travelers in the German regions bordering the Netherlands. “For example, we provide the Arnhem-Düsseldorf connection and Eindhoven-Düsseldorf will soon also be available.”