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Bulgarian State Railways Hope to Become Profitable by 2015
Date: 22/12/2010
Bulgarian State Railways Hope to Become Profitable by 2015

Bulgarian state railway company BDZ expects to start making profit in 2015 as a result of a program of wide-ranging measures, its management announced.

In the first 11 months of 2010, BDZ improved its financial results by BGN 17 M compared with the same period of 2009, according to Vladimir Vladimir, Chair of the Board of Directors of the state-owned company.

He said that the total loss of BDZ in 2010 is expected to be down by between BGN 15 M and BGN 25 M compared with 2009. The board projects that the losses will be down by at least that much in 2011, and that by 2014 the state company will have a zero deficit, starting to make tangible profits in 2015 and 2016.

He pointed out that one of the measures that contributed substantially to the improved financial results is the reduction of operational costs by reducing the staff by about 1 200 workers, making a more beneficial contract for fuel supplies, and optimizing the locomotive spending.

At the same time, in January-November 2010 the volume of freight shipments transported by the BDZ grew by 62 000 tonnes compared with the same period of 2009, which is bringing the company closer to the pre-crisis freight traffic levels.

Vladimirov vowed that the surprise ticket inspections by conductors will continue as part of a campaign to reduce substantially the number of people who try to evade buying tickets. Only in November, these inspections led to a 5% increase of the BDZ revenue from passenger tickets year-on-year.

"The reforms in 2011 will be focused on the correct organizational restructuring of the two companies – BDZ Passenger Services and BDZ Freight Services," Vladimirov explained, as cited by bTV.

He said about 1000 people will be laid off from BDZ in 2011, and some practices that are costly but produce little benefit will also shed.

The state company will seek funding from the EU Operational Program "Transport" in order to pay consultants to help it with the operation and repairs of the trains.

In his words, the online sale of BDZ tickets should be up and running by the second half of 2011. Its setup will cost the company about BGN 700 000.

Earlier on Wednesday, BDZ CEO Tencho Popov announced that the company will be purchasing 30 new sleeping cars from the Turkish company Tuvasas.

BDZ has a contract for railway passenger services with the state for 15 years; in that period it is supposed to receive a total of BGN 1.2 B, but the subsidy will probably be decreased.

The Bulgarian government recently signed a framework memorandum with the World Bank for loans for BDZ and the National Railway Infrastructure Company expected to total BGN 600 M for urgent reforms in the sector; the restructuring, however, will probably produce much social tension as several thousand workers might be laid off.

Topic: Economy

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