THE Rhine-Ruhr Transport Association (VRR) has decided to terminate several contracts held by Abellio from February 1 2022 following a board meeting on November 22, but discussions over the operator’s replacement are continuing.
VRR and other transport authorities in the region agreed to pay Abellio an additional €8m supplementary payment for the period to January 31 2022. However, VRR has postponed a formal decision on what will replace Abellio until early December.
VRR says it is planning to introduce emergency contracts for up to 24 months to replace Abellio, for which it has assigned €380m. VRR then plans to award new 15-year contracts through a tender. VRR has though struggled to obtain the data required from Abellio to issue the emergency contracts, as the operator is reportedly not sharing data on staffing levels and other resourcing information.
To complicate matters, Abellio is seeking to win all or some of the emergency contracts to replace itself, although it is unclear whether VRR and the other authorities will or are able to accept an offer from Abellio albeit under new emergency terms.
Tortuous negotiations
In long running negotiations, parts of which have played out in public as Abellio has released copies of some correspondence, it appears the transport authorities have become frustrated with the operator’s position, which has been to simultaneously seek better terms while at the same time frustrating the authority’s ability to switch operators. Local government sources have expressed their frustrations to local media, pointing out that in any other sector of state government, a non performing contractor would have been replaced much more quickly.
Abellio is the largest non-German Rail (DB) owned regional rail operator in Germany, with much of its activity in the Ruhr region.
Abellio had previously written to VRR and fellow transport authorities Westphalia-Lippe Local Transport (NWL) and Rhineland Regional Transport Association (NVR) offering new, higher prices - based upon net cost reimbursement - to continue emergency operation of all its existing contracts.
The operator also stated publicly before the November 22 meeting that if emergency contracts are deemed necessary, then it remained the best interim operator via its wholly owned Westfalen Bahn subsidiary. Abellio also said it is willing to act as a subcontractor if a new operator is appointed.
VRR and other transport authorities rejected an offer by Abellio earlier in November for its parent company, Netherlands Railways (NS) to pay €32.95m in compensation to terminate the Rhine-Ruhr Express (RRX) and S-Bahn Rhine Ruhr (excluding diesel operated route S7) contracts and assist in handing these to new operators. Both contracts, which have only been held by Abellio for three or four years, use trains leased from VRR.
Around 100 Abellio staff lobbied the meeting, protesting at the threat to their jobs, although it is likely they could transfer to a new operator given staff shortages in the rail sector. Abellio has raised the prospect of industrial action in its negotiations with the transport authorities.
Claims for damages?
Abellio made a €147m loss after recording €744m in turnover in 2020 in Germany. This was partially caused by impairment costs of €84m, and Abellio was placed in court supervised insolvency protection in July 2021. This ended in October but the fundamental causes including cost inflation and inadequate forecasting of future costs by Abellio have not changed. As a result, Abellio is scaling back or disposing of its German operating subsidiaries.
Several transport authorities including those in the Ruhr are reportedly seeking damages which may be available via parent company guarantees in the original contracts signed by Abellio. In the southern state of Baden-Württemberg a claim for damages in the “hundreds of millions of euros” has been discussed. State-owned operator Sweg will take over Abellio’s operations in 2022 after buying Abellio’s subsidiary for a reported €6m.
