Description of the German rail market

The German regional railway market has a volume of around €10 billion per year and a network covering roughly 670 million train-kilometers per year andhas been deregulated since 2003, with responsibility for its organisation assigned to the 16 federal states of Germany. Each state has its own way of managing its regional market. This has led to the creation of 27 regional passenger transport authorities (PTAs), each of which has adopted a different tendering regime, with a substantial flow of potential franchises. There is a constant flow of tenders into the market, and this will continue well into 2019. In 2018 the network Elbe-Spree will come to the market and will be the largest ever bid on the German rail market with more than 26 million train-kilometers in 4 lots.
While the number of players competing with state-owned Deutsche Bahn (DB) AG has continued to grow, the majority of tenders in 2016 were awarded to parties other than DB. In 2017 there were fewer tenders, but most of them were won by DB. DB still services around 66% of regional rail transport in Germany.
In Germany, Abellio only has gross contracts with the PTAs, which means that Abellio Germany is paid for its service per train kilometer. The revenue/fare box risk is allocated to the transport authority. On top, inflation risk is hedged by appropriate escalation formulas. Thus, the risk profile of gross contracts is low.

Abellio Germany rail concessions

In Germany, Abellio continues to operate in three regions, together operating 6 concessions. In Nordrhein-Westfalen (NRW) it operates with Abellio Rail Nordrhein-Westfalen 4 rail concessions, being Emscher Ruhrtal-Netz, Ruhr-Sieg-Netz, Der Mungstener and Niederrhein-Netz. In Nordrhein-Westfalen and Niedersachsen it operates with WestfalenBahn, the Emsland- und Mittelland-Netz concession. In Mitteldeutschland it runs with Abellio Rail Mitteldeutschland the Saale-Thuringen-Sudharz Netz (STS). Abellio also continues mobilising the DISA network in Mitteldeutschland, in NRW the Rhein-Ruhr-Express, S-Bahn Rhein-Ruhr and Ruhr-Sieg-Netz 2 and also in southern Germany (Abellio Rail Baden-Wurttemberg) in order to be ready to operate Stuttgarter Netz rail franchise in 2019. The concessions that are currently being operated are:

• * estimated, no proven figures available

The franchises in the mobilisation phase are:

2017 overview

Abellio Germany is currently the fourth largest train operating company in Germany, with an annual turnover €245.7m in 2017. In recent years, Abellio has built up a strong competitive position in the German railway market and won a number of franchises.
Abellio aims for controlled growth. This means we opt for selective and responsible participation in tenders, professional mobilisation and commercial operation. Abellio became the sole shareholder of WestfalenBahn at the end of 2017. Before this aquisition WestfalenBahn had 4 owners, being Abellio, moBiel GmbH, Mindener Kreisbahnen GmbH and Verkehrsbetriebe Extertal GmbH. Each had 25% of the shares.
In Mitteldeutschland, the STS franchise went in December into its third year of operations. While the overall performance is satisfactory, the many infrastructure works of DB Netz prevented Abellio Rail Mitteldeutschland from reaching its full performance potential.
The Regional Transport Association of Westfalen-Lippe (NWL) awarded Abellio Rail NRW again the gold medal for quality leadership this year. For the third year in a row, Abellio was the frontrunner in all three categories of punctuality, service performance and vehicle condition. WestfalenBahn came in second.

Outlook for 2018

The market is expected to remain stable. Abellio will continue to bid selectively and responsibly. In 2018 we will start our operations of Rhein-Ruhr-Express (RRX) and the Dieselnetz Sachsen Anhalt (DISA). We will also focus on the mobilisation of our other franchises, such as Stuttgarter Netz (STN), S-Bahn Rhein-Ruhr (SBRR) and Ruhr-Sieg-Netz (RSN2).

Organisation and staff

We have signed a collective tariff agreement with the union Gewerkschaft Deutscher Lokomotivführer (GDL). The new agreement stipulates a 39 hour work week instead 40 hour work week (starting 1 January 2018) and will later go down to 38 hours.

New trains

Abellio Germany has ordered new rolling stock via an operational lease arrangement: 48 Bombardier Talent 2 trains will be produced for Stuttgarter Netz. The trains for Abellio, owned by the PTA Nahverkehrsgesellschaft Baden-Württemberg (NVBW), are 26 electric multiple units with three carriages and 22 electric multiple units with five carriages. End of October the first train was presented at the Bombardier site in Hennigsdorf to the public with Baden-Württemberg's Minister for Transportation Winfried Hermann.
For DISA network Abellio will get 54 Coradia Lint 1 from Alstom financed and owned by NS Financial Services Company Limited (NSFSC). The first new train was presented in November 2017 to the public at Alstom in Salzgitter. As sole shareholder of WestfalenBahn the complete rolling stock is new in the Abellio portfolio. 15 Flirt trains and 13 double-decker KISS trains are rendering services in the Emsland- and Mittelland-Network (EMIL).

Workshop under construction

A three-track servicing hall with a total length of 120 meters for Stuttgarter Netz will be built in Pforzheim. This city in Baden-Württemberg near Stuttgart has a long standing train tradition and is ideally located within the route network. It is foreseen that the construction work will be finished in time for operation at the beginning of 2019.