Railways operator to lay off 1,000 staff
Talking to the STA, Dušan Mes, who started his third term at the helm of the company this spring, also wants to double the profit of the cargo arm, SŽ-Tovorni Promet with the help of a strategic partner.
Efforts to strike a strategic partnership are in the final stages, with 49% of the company going into the hands of Czech EPH Holding. "A strategic partner is a good thing. Optimal, considering the situation."
"It's hard to find a partner capable of contributing to the positive potential of SŽ-Tovorni Promet." Big national operators have no interest to expand because they have enough problem as it is, while private operators are also in trouble.
Mes said that the cargo arm was in desperate need of new cars, investments, modernisation and additional capabilities. Above all, distances must be extended beyond 500 kilometres and the company should take over a similar one in either Italy, Austria or Hungary, or establish its own new company in this part of Europe.
"This needs to be done in two years and you need additional EUR 100 million or more," Mes said. "All in all, we're happy. But a lot of work still needs to be done to achieve what we set out to do together: doubling of EBIT in the next ten years."
The cargo arm generated EUR 8 million in EBIT last year. "Somewhat below plans, but satisfactory given the circumstances."
Touching on business results expected for this year, Mes said the results will be worse than last year, when the group's EBIT reached EUR 32 million, but half-year results will still be satisfactory. He added, however, that cargo transport dropped by 15% in the first half of the year.
Mes said that the plan to let go 1,000 staff was to ensure the group remained in the black. The layoffs will bring their number to 6,000, which Mes calls optimal. Only a few years ago, 9,000 people were employed by Slovenske Železnice.
Layoffs will cost EUR 30 million in severance and take place in all companies within the group, mostly involving people close to retirement age who will be able to draw unemployment benefits until their pensions come in. "This is fortunate, so we don't have to lay off young people."
Currently, the group is introducing new passenger trains, having ordered 52 sets from Swiss maker Stadler over the course of the past two years. They hope to order additional 20 in the coming years.
"I hope that in my third term the age of oldest trains will be reduced to 15 years. Before it was 35," he said. The first Stadler trains will start transporting passengers in autumn. Initially, this was planned earlier but the pandemic pushed back the testing.
The CEO also touched on Emonika, a project involving a new train station in Ljubljana and commercial property. After years of changes to the initial plans, the publicly funded part of the project has now been completely separated from the commercial aspect and Mes is optimistic that it may go ahead.
He finds that Slovenia needs an infrastructure fund that would provide funding 20 to 30 years in advance. The strategy of top infrastructure projects means nothing without realistic sources of funding, he said, adding that covering the needed investments from the national budget was impossible.
He listed a number of improvements that could be made on the railway network. "These things would cost a lot. That is why we need a fund the likes of Switzerland, Germany and Austria. Such investments do not happen over night, they are long-term projects."
Commenting on a recent overhaul of the railway to Kočevje in the south, Mes said it took eleven years to modernise 30 kilometres of tracks with funding providing solely from the budget. "At this pace, we won't be able to modernise the network in 100 years."