Chairman’s letter

Dr. Richard Lutz
CEO and Chairman of the Management Board
of Deutsche Bahn AG

Photo Dr. Richard Lutz

Dr. Richard Lutz
CEO and Chairman of the Management Board of Deutsche Bahn AG

Ladies and gentlemen,

The railway is part of the lifeblood of this country. Every day, we transport millions of people and goods to their destination in a safe and environmentally friendly manner. This is a guiding principle behind our new DB umbrella strategy Strong Rail, through which we have laid the foundation for an unprecedented expansion and modernization program. We are fully committed to growth and a shift in the mode of transport – also in line with a climate-friendly mobility change. We are at the start of a decade for railway which we intend to actively shape and to which we are looking to contribute for a green and mobile future in this country.

The coronavirus pandemic has highlighted to us just how closely society and railways are interconnected. DB stands for the contact between people and the exchange of goods. If both are significantly reduced, this will, of course, have an impact on our business. However, it is also clear how important DB transport services are for people’s mobility and to logistical supplies for the economy. This is why we have put all our energy into maintaining operations as extensively and efficiently as possible, for as long as we can, in order to ensure a stable and substantial basic supply of mobility and logistics in Germany. From the outset, our top priority has been protecting customers and our employees.

Although we are not yet able to quantify the negative effects of the coronavirus pandemic on our financial situation, it is already clear that it will have a significant negative impact on business development in 2020. However, we will not allow this to dissuade us. The railway is and will remain the key to practical climate protection and a sustainable mobility revolution. We are continuing to pursue our goal of becoming the backbone of green mobility, and we will therefore continue our capital expenditure and recruitment initiative this year.

In order to make our contribution to a sustainable climate and mobility revolution, we have set ourselves ambitious strategic targets: in long-distance transport, we intend to double the number of passengers to 260 million. To this end, we are investing in vehicles, creating additional services and successively implementing Germany in sync (Deutschland-Takt), which offers connections between the largest metropolitan cities every half-hour. We intend to gain a billion additional customers in local transport. At DB Cargo, we intend to grow by more than 70 percent. Setting this target is consistent with the Federal Government’s growth expectation, thereby increasing the market share of rail freight transport in Germany to 25 percent. In order to realize this ambitious growth program, we are increasing the network capacity by more than 30 percent, which means an additional volume produced of 350 million train-path kilometers.

The starting conditions for these ambitious projects could not be better. Politics and society are clearly committed to strengthening the railway and to shift the mode of transport toward the rails. We can see this in the numerous decisions that were made in favor of this mode of transport in 2019. These include, for example, legislative decisions, which have given rail a key role in achieving the environmental targets in the transport sector. The lowering of value-added tax on long-distance transport tickets, in particular, was an important step in this regard. The significant increase in funds for maintaining and modernizing the rail network, stations and energy systems within the framework of the Performance and Financing Agreement (LuFV) III and other resources allocated by the Climate Package to infrastructure companies also make a decisive contribution to increasing the capacity and quality of the infrastructure.

A substantial strengthening of the railway has thus been given the political and social green light. We are grateful for this support. We will approach the tasks ahead with humbleness and discipline. Rather than a quick effect, we are committed to a sustainable performance increase at the core. This requires perseverance and patience, because transforming and expanding DB is the task of a generation. One thing is clear: everything we do is aimed at ensuring a noticeable increase in quality for our customers.

Growing demand is supporting us along this path. More and more passengers are now using the railway as a comfortable, environmentally friendly alternative to cars and planes. In 2019, about 151 million passengers, including many new customers, traveled aboard our long-distance trains – a record number. We warmly welcome each one of these passengers coming aboard and are working hard to convince our new customers with improved service and reliability.

We also see grounds for optimism in terms of punctuality. In 2019, 75.9 percent of long-distance transport was on time, one percentage point above the previous year overall. This in spite of a volume of construction that has climbed to a record level. Here, the efforts made in recent years to curb operational impacts from construction work are noticeably positive. We also saw a slight improvement in local transport to 94.3 percent. Overall, the punctuality of our passenger transport was 93.9 percent, a 0.4 percent increase on the previous year. This slightly positive trend is encouraging and shows us that our practical measures and approaches, along with the committed engagement of our colleagues, are achieving increased punctuality. We are progressing step by step.

We can be satisfied with the development of the financial key figures against the backdrop of the current challenges: the adjusted revenues of DB Group rose slightly by just under one percent to 44 billion euros in 2019. The operating profit (EBIT adjusted) was 1.8 billion euros, a drop of 13 percent. This decline can be seen in the context of extensive future expenditures to improve quality and service. With our Strong Rail umbrella strategy, we are at the beginning of a huge capital expenditure and growth program. Its foundations have been laid and further energetic implementation is our top priority.

We believe that we must now start making the necessary future expenditures in a better railway and a strong rail system. This will also be reflected in lower operating profits over the next few years, because many measures will initially result in increased expenditures. External challenges such as the coronavirus crisis will also undoubtedly have an impact on our figures. We are firmly focused on the financial stability of DB. Our indebtedness in 2019, at just over 24 billion euros, has even developed slightly more favorably than expected. DB remains a reliable partner for the capital market and investors.

The climate also benefits from our massive expansion plan. Already today, rail is the most environmentally friendly mode of transport and we at DB are the largest eco-power user in Germany: currently, the eco-power share in the traction current mix is already at 60 percent. The next target is a share of 80 percent by 2030. By 2038 at the latest, we will have completely switched the traction current used by DB to eco-power.

A shift in the mode of transport toward rail is an essential component of climate protection. For this reason, we are continuing to place infrastructure at the fore, because this is key not only for growth, but also for good operating quality and high punctuality. In 2019 alone, we modernized 1,500 kilometers of tracks and 1,600 switches and invested almost 11 billion euros. In addition, about 650 large and small stations have been renovated. We are also driving the network expansion and construction forward and working to ensure greater acceptance of large-scale projects. We are also picking up speed in terms of digitalization under the motto Digital Rail for Germany. In 2019, we commissioned the first digital interlocking for operation on a long-distance route in Rostock-Warnemünde. In 2020, we expect an ETCS starter package to be financed. The experience gained from this will form the basis for the industrial rollout of digital rail in Germany.

In 2019, we significantly expanded our long-distance transport services on particularly high-demand lines, such as Berlin―Munich, Berlin―Frankfurt and Hamburg―Rhine/Ruhr. This is also made possible by our new flagship, the ICE 4, the first brand-new specimens of which are being put into operation at frequent intervals. In addition, the green light has been given for the purchase of 30 additional high-speed and 23 ECx trains. Furthermore, we have decided on the short-term additional expansion of our Intercity fleet to include 17 new double-deck trains. They will be deployed on the new Rostock― Berlin―Dresden line, with which we are continuing to improve long-distance transport in the east of Germany.

DB Regional also showed itself to be a strong market leader in 2019. In the highly competitive local rail transport market, DB Regional achieved a hit rate of 76 percent of the tender volume that DB Regional was able to apply for. This is an increase of six percentage points compared with the previous year. The market share of DB Regional is therefore at 64 percent 25 years after the liberalization of the regional transport market.

At DB Cargo, we are currently undergoing an ambitious change of direction in order to fully align ourselves toward growth. This also means taking greater advantage of the potential of digitalization: at the end of 2019, 43,700 cars were already equipped with the latest telematics and intelligent sensors. By the end of 2020, the entire fleet in Germany is expected to comply with the new standards. DB Schenker is also on course toward digitalization: for example, in 2019, exoskeletons to support lifting and turning operations by employees were tested at several logistics locations. A trial of AI-controlled logistics robots has started at the Leipzig site.

We believe that digitalization and networking will significantly increase the attractiveness of our offers, for example digital transport support services, which we are continuously expanding. In 2019, we extended the comfort check-in as well as and at DB Navigator – which celebrated its tenth anniversary in December! – a new capacity indicator has been introduced. In addition, in 2019 we started bringing WiFi into our Intercity fleet as well. 2019 was also a good year for our on-demand mobility services under the ioki brand. For example, we expanded our innovative electro-shuttle service in Hamburg to another part of the city.

We cannot wait to shape the future of the railway system for the benefit of the climate, society and our customers. The railway has not played such a vital role since the reunification of Germany. We have undertaken this task of our own accord. Germany needs a strong rail system. This is our mission for the coming years and our motivation for every new day.


Richard Lutz

Dr. Richard Lutz
CEO and Chairman of the Management Board
of Deutsche Bahn AG

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