Business Czech Railways will have to adapt as property sales wind down

03-09-2014 15:52 | Jan Velinger

Czech Railways has two years, writes daily Mladá fronta Dnes, to adapt long-term strategies to ensure continued profits and growth. Until now, the state-owned firm relied heavy on the sale of property as a financial buffer but that "well" will soon run dry at a time when debts at the firm are on a rise.

Photo: Filip JandourekPhoto: Filip Jandourek Until now, the sale of property no longer needed by Czech Railways brought in roughly a billion crowns per year, according to sources, but that ‘era’ is almost at an end. The head of the firm, Daniel Kurucz, told Mf Dnes that the railway firm was almost at the point when it had sold most of what it could and that new sources of income would have to be found moving forward. The firm will soon see the transfer of railway stations it owned to the Czech Railway Infrastructure Administration. The transfer is worth billions of crowns, but beyond that beyond that only a few properties remain, their value counted in the hundreds of millions.

One building is a hotel in Prague’s Michle area, the other two, administrative centres in Brno and Plzeň. This year, sales so far are also nothing to write home about, amounting to only 85 million. An offer for the Michle site, the company’s CEO confirmed, was far too low. Meanwhile, unfulfilled tasks remain: Czech Railways wants to see the completion of the sale of plots for a development of an office complex which would likewise boost traffic at Masaryk station and to complete other projects at Holešovice and Smíchov.

What are options moving forward?

According to Mf Dnes, Czech Railways will aim to pave the way for new revenues in additional ticket services.

Revenues in the billions, from the aforementioned sale of stations to the Infrastructure Administration, as well as additional projects, should help cut into Czech Railways overall debt, reaching 31.6 billion. The CEO of Czech Railways made clear to the daily the situation was not critical: although debt will culminate in the next two years, massive investment in the modernization of its railway fleet will also wrap up and Czech Railways will want to maintain new acquisitions at the level of write-offs, replacing old equipment with new at the cost of around 2.5 billion.

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