Chairman’s letter

It may sound paradoxical, but for DB Group, 2020 was a year that strengthened us. We are living through a Covid-19 crisis, not a Deutsche Bahn crisis. On the contrary, the past year has provided impressive confirmation that we are an essential part of this country’s lifelines. We are systemically important. We are and always have been dependable.

This is the core of our Strong Rail corporate strategy. A strong rail system means being there for our society – to help people get where they need to go and to provide logistics supply for the population and the economy. This is particularly true in times when old certainties can no longer be taken for granted. We are living up to our responsibility.

The world has experienced a shift in its key values and priorities over the past year. Covid-19 is still defining our everyday lives. Social distancing is still essential. Carefree socializing is still a long way off.

During the lockdown, we were all called on to stay home, in both spring 2020 and winter 2020/2021. The pandemic slammed the brakes on the track record of the railway in Germany. We were a transport provider for a society that was suddenly no longer allowed to travel. Record figures in our passenger numbers at the beginning of 2020 were followed by painfully empty trains – and an extremely tense financial situation.

Nevertheless, little has changed in my fundamental optimism about the railway’s future. On the contrary, it is stronger than ever. Our task and our “raison d’être” have been confirmed and reinforced by the crisis.

Global climate change remains a massive threat. Covid-19 may have temporarily drawn attention away from it, but it is still a vital issue for our future. There is no vaccine against climate change. Only a new way of getting around will allow us to heal our planet. Our customers are also fully aware of this.

Train travel is active climate protection, nothing has changed about that. And we are making this most climate-friendly means of transport even greener and more attractive. With over 160 green initiatives, we are strongly committed to protecting the climate, to preserving nature and resources, to noise remediation and to social responsibility. We are the frontrunner in the expansion of eco-power. By 2050, we will be climate-neutral, and by 2030 will have already more than halved our CO₂ emissions compared to 2006. Right now, we are already the largest eco-power user in Germany, with 61 percent renewable energies in the traction current mix.

This is another reason why Deutsche Bahn was again awarded the top rating A in the renowned climate protection rankings of the global non-profit environmental organization, the Carbon Disclosure Project (CDP). For us, green is more than just an attitude. It is embedded in everything we do. DB Group is considered to be an international leader in its efforts to combat climate change. Deutsche Bahn is also expressly committed to the principles of the United Nations Global Compact, the world’s largest initiative for sustainable and responsible corporate management.

The European Commission has declared 2021 the European Year of Rail. In its “Green Deal,” the European Union has committed to the goal of being climate-neutral by 2050. A shift in the mode of transport is vital for this, therefore making a strong rail network essential. TransEuropExpress (TEE) 2.0, an initiative of the Federal Ministry of Transport and Digital Infrastructure, is an example of high-performing and modern European rail transport. Its purpose is to provide better connections between existing train links in future. The goal is a European synchronized timetable that unites Europe even more closely and, above all, in a climate-friendly way.

Without a massive shift in the mode of transport to the environmentally friendly rail, neither German nor European climate targets are achievable. The strong commitment of policymakers provides significant support in this respect. The Master Plan for Rail Transport, the measures to strengthen the rail as part of the Climate Action Program 2030, and the further ramp-up of funds for rail-related items in the 2021 Federal budget – all of these demonstrate: rail is the future.

We will deal with the financial consequences of the pandemic together. The second wave forced us to revise our forecasts and adjust them significantly downwards. For the period up to 2024, we expect the railway business to suffer damages of about ten billion euros. There has never been a more drastic slump in DB Group’s history. The adjusted revenues of DB Group fell by 10 percent to 39.9 billion euros in 2020. The operating loss (EBIT adjusted) was –2.9 billion euros, a drop of 4.7 billion euros.

Dealing with these financial losses while at the same time being able to continue our capital expenditure program for the Strong Rail strategy requires a joint effort from all the major parties involved – companies, managers, employees and owners. This philosophy underpins the “Alliance for our Railway” (“Bündnis für unsere Bahn”), made up of politicians, DB Group and employee representatives. We have stated that we will do our part by bearing half of the expected Covid-19 damages in the railway business in Germany ourselves. We have already implemented a significant part of this in 2020. The collective labor agreement concluded with the Railway and Transport Workers Union (Eisenbahn- und Verkehrsgewerkschaft; EVG) makes a significant contribution in this respect.

A key factor in facing up to these major challenges is the faith of our passengers. In 2020, our commitment was rewarded with the highest customer satisfaction and best brand awareness in DB history. Our regular customers continue to have faith in us and value our reliability and flexibility. For this reason, too, I am convinced that rail passengers will return. To support this, we are putting all our energy into improving our safety and service even further. The entire ICE fleet, more than 130 stations, all DB Lounges, and the first regional trains and buses now have WiFi. And WIFI@DB continues to grow: in 2021, several hundred regional trains and buses will follow suit, along with the Intercity trains.

We are working very intensively – and successfully – to further improve punctuality. In 2020, 81.8 percent of all ICE and Intercity/EC trains ran on time. This is an increase of 5.9 percentage points compared to the previous year (2019: 75.9 percent) and the best value in 15 years. The significant upward trend that was already apparent at the end of 2019 has continued over the course of 2020. DB Group has also further increased the punctuality of its trains in regional transport compared to 2019. At 95.6 percent, 2020 saw DB Regional achieve its best punctuality figures since DB AG was founded.

The reasons for the improved punctuality included, of course, fewer passengers, which reduced standing times at stations. At some points, fewer trains were in use, including in freight transport. This reduced the burden on the rail network, particularly the railway hubs. However, the further improved and more customer-friendly construction planning also had a positive impact on punctuality. Despite Covid-19, the construction activities were higher than ever before – at times at more than 900 construction sites in a single day. Our construction management center has certainly proved its worth in this respect: 14 percent fewer trains were delayed due to better management of the construction sites – despite a 20 percent increase in construction activity.

Together with the Federal Government and the Federal states, we have invested a record 12.2 billion euros in the rail infrastructure, significantly increasing quality and capacity. This includes our modernization campaign for stations, which we successfully furthered in 2020: together with the Federal Government and the Federal states, we have invested about 1.6 billion euros in modernizing existing stations and improving their accessibility and in constructing new ones. Together with the Federal Government, important steps have also been taken in the digitalization of the infrastructure.

At the same time, we are expanding the fleet to make more vehicles available. More than 50 new ICE 4s are already in use. In addition, DB Long-Distance commissioned nine double-deck Intercity trains last year and ordered 30 new ICE 3neo trains. The long-distance transport fleet will be modernized by 2026 for about 8.5 billion euros.

By increasing the capacity on the line and in our workshops, we are shortening the travel time and making train travel even more attractive. Our customers got their first taste of Germany in sync with the December timetable change between Hamburg and Berlin, where we have started offering half-hourly intervals for the first time.

DB Regional was able to assert its position as the market leader in local transport. The company maintained all existing services and was able to win additional services from the competition. Overall, the newly awarded order book was increased for the second year in a row through competitive and profitable offers. DB Regional’s market share is therefore stable at about 61 percent of train kilometers traveled in the growing regional transport market. Our approach to local transport takes in all modes of transport and we are also successfully using on-demand services such as ioki to focus on new forms of local public transport.

The Covid-19 crisis has demonstrated just how important rail freight transport is. DB Cargo runs about 20,000 trains per week, making it the climate-friendly backbone of the economy in Germany and Europe. For example, a single freight train transports the freight of 52 trucks. And every ton that is shifted to rail saves 80 percent of CO₂ compared to trucks. This spurs us on. DB Cargo has therefore consciously set itself a growth strategy for 2020: for the climate and for a sustainable profitability.

In the Covid-19 year of 2020, DB Schenker proved itself to be a reliable supplier in a crisis. The steady reinforcement of supply chains by our logistics colleagues has helped to ensure important medical products are supplied to people in Germany, Europe and around the world – for example, the protective masks that have become an essential part of our lives. The incredible performance of DB Schenker under difficult conditions was rewarded with a record result. DB Schenker will once again be taking on an important task this year: our logistics subsidiary is helping to supply people worldwide with vaccines against Covid-19.

Digitalization is the driver of progress in all our business areas. We have transferred our IT to the cloud as much as possible and closed the Group’s own data center. This means that we have completed one of our largest IT projects two years ahead of schedule, making us pioneers in Europe and one of the first major groups to make systematic use of the cloud. This decision proved to be perfect in this Covid-19 period. Our IT systems also functioned smoothly when tens of thousands of employees switched to working from home at the same time.

2020 was not the year of passenger records or profits. It was a year full of challenges, restrictions and adjustments. The economic consequences are enormous. But we have shown that we are there for the people. We are investing massively in the future and are continuing to build on our Strong Rail strategy every day. We have the right task, we have the right strategy. And we have the right team. I would like to thank our employees, who more than ever over the last year have all proved to each other that we can be relied on. The DB team is ready for the future.

Sincerely,

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