The European Union has approved €1.9 billion in state aid to support German rail freight operator DB Cargo, provided the company implements a restructuring plan to ensure its long-term sustainability. DB Cargo, a subsidiary of Deutsche Bahn, has faced mounting financial challenges, with the aid package seen as critical to maintaining its operations as a low-emission alternative to road transport.
The aid approval comes after a two-year investigation initiated in 2022 following a competitor’s complaint. The inquiry examined DB Cargo’s financial arrangements, including a profit and loss transfer agreement with Deutsche Bahn, intra-group services, and the German Federal Railway Fund’s partial coverage of civil servant remuneration.
The EU’s approval is tied to a restructuring plan designed to secure DB Cargo’s viability by the end of 2026. This includes measures to streamline operations, reduce costs, and divest specific activities and assets to address competitive distortions. As part of the agreement, the controversial profit and loss transfer arrangement will be terminated on January 1, 2025.
The European Commission expressed confidence that these commitments will balance the market and ensure fair competition. “The Commission is satisfied that divestitures of activities and assets of DB Cargo, committed by Germany, will mitigate distortions of competition brought about by that state aid,” it said in a statement.
DB Cargo plays a vital role in Europe’s transition to sustainable logistics by offering a lower-emission alternative to road freight. Securing its operations is seen as crucial to advancing environmental goals and maintaining reliable rail freight services across the continent.
The state aid approval provides DB Cargo with a lifeline to continue its transformation. The company is expected to deliver on its restructuring plan, with the aim of achieving financial stability and long-term competitiveness by the end of 2026.
