WESTPHALIA-Lippe Local Transport (NWL) has announced revisions to several contracts operated by Keolis via its Keolis Germany subsidiary, which trades as Eurobahn. Under the revised arrangement, Keolis will sell Eurobahn to a “neutral” owner.

The contracts concerned are Maas-Rhine-Lippe, the Hellweg, the Teutoburger Wald, and Ostwestfalen-Lippe. The move is supported by other German transport authorities in the Ruhr region, especially Rhine-Ruhr Transport Association (VRR), and others in the Netherlands.

A Keolis spokesperson told IRJ that Keolis Group has reached a preliminary agreement with both NWR and VRR over the transfer of Keolis' stake in Keolis Germany to a new shareholder. The revised contract 2.0 will be finalised in the next few weeks. The move follows long-running discussions over the inability of contract holders to make money due to issues beyond their control, such as rising staff costs, the cost of funding compensation for delays, and the high level of DB Networks' infrastructure work, failures, and problems that cause some of the delays as well as additional costs.

These issues led Abellio to be placed in court supervised financial protection in July. The German government paid employees wages for three months until early October while the contracts were reviewed. It also led to unprecedented intervention by the Dutch government with German state premiers on behalf of Abellio, which is wholly owned by the Dutch state via Netherlands Railways (NS). Unlike Abellio, Keolis has not used such procedures with shareholders covering its losses, the largest of which is French National Railways (SNCF).

NWL has agreed that Eurobahn will retain its existing network and that Keolis’s shareholders will provide financial support for the length of the contracts concerned. However, NWL has also agreed that it and the other authorities involved will share the financial burden of increased staff and delay compensation costs. Other German contracts awarded recently, such as Agilis’ Regensburg-Danube Valley tender in Bavaria, have also included such arrangements.

Keolis will cease to be a shareholder in Keolis Germany (Eurobahn) by the end of 2021 with the company transferred to a new, neutral shareholder by January 1 2022 at the latest. As part of the agreement, Keolis has agreed to finance the current contractual obligations and the remaining deficits over the remaining contractual periods, some of which stretch to 2032.

By allowing Keolis to sell Keolis Germany (Eurobahn), the transport authorities appear to be maintaining services without rewarding failure, while at the same time providing Keolis’ shareholders a quantifiable level of future financial risk. In 2016, Keolis won contracts to operate part of the Ruhr region S-Bahn network. However, these contracts were withdrawn in late-2019 before they commenced as transport authorities led by VRR judged Keolis insufficiently prepared to operate them.

The identity of Eurobahn’s future owner is unclear. A company owned by the transport authorities, which is used elsewhere in Germany, is one option.

NWL has also recently agreed revised contract terms with Abellio, and in line with similar discussions elsewhere in Germany, it is likely that Abellio will reduce the number of routes it operates with some being retendered.