Thursday, 28 March 2019

Deutsche Bahn to sell Arriva

The transport group Arriva, which runs UK rail franchises including Northern and the London Overground as well as buses around the country, is to be put up for sale by its owner, Deutsche Bahn.

The German state rail operator has revived plans for a sell-off or possible public flotation for the UK-based company.

Arriva, whose headquarters is in Sunderland, operates bus and rail services around Europe and was acquired by Deutsche Bahn in 2010.

The German firm confirmed on that its supervisory board in Berlin had told managers to explore options for selling Arriva, before the announcement of financial results on 28th March.

Deutsche Bahn will look for buyers but will also continue to examine the possibility of an IPO. Initial public offering) The idea of a sell-off was raised in 2016 but was shelved after Britain voted to leave the EU, amid concerns the business would be undervalued and investors put off after the collapse in sterling.

The German owner had been looking to curb its own mounting debts, although the group returned to profit in 2017.

However, investment of €1bn (£850m) in new high-speed trains last autumn pushed Deutsche Bahn’s debts close to €20bn.

Germany’s railway network has been afflicted by widespread problems from ageing trains and a lack of capacity, and its bosses are keen to raise funds to upgrade the infrastructure.

Last year, Arriva – which is responsible for all of Deutsche Bahn’s regional passenger transport services outside Germany – generated revenues of €5.44bn. It employs 53,000 full-time staff in 14 European countries including the UK.

Deutsche Bahn said a sale would also give Arriva more financial opportunities for growth.

In the UK, Arriva’s biggest going concern is Northern, who's passengers have been subjected problems caused by unions in a row over the role of guards on trains.

Arriva has been praised for operating Chiltern and open access services such as Grand Central, but shouldered criticism for running down Wales’s train services over a long contract, and missed out on a string of franchise bids. It is one of the UK’s largest bus operators, running over 5,000 buses.