Czechia Industry News Rail

Škoda Transportation proposes Czech Railways to create joint venture for servicing trains

Repairs of Regionova DMU at DPOV shop, source: DPOV
Repairs of Regionova DMU at DPOV shop, source: DPOV

Czech rail market may see an unexpected merger in following months and years. Companies that faced arbitrage for more than billion CZK now listen to each other. Škoda Transportation from PPF group of Petr Kellner proposed Czech Railway (ČD) to create a combined rail repair shop.

The information comes from a letter sent to ČD in the second half of August. Škoda Transportation CEO Petr Brzezina is signed under the letter; the letter is available to Zdopravy.cz redaction. “We will not oppose considering an idea of creating a combined rail repair shop to secure effective service for our business. I believe that combination of technical and administrative know-how of Škoda Transportation, and maintenance capacity of the Czech Railway may significantly increase competitiveness of the national carrier in face of competition by providing reliable vehicle operations and services to passengers,” Brzezina wrote and proposes to quickly establish a working group to initiate negotiation and potentially set up the company at the turn of the year.

Czech Railways spokesperson Radek Joklík confirmed existence of the letter. “We have received the letter and talks will happen,” Joklík said. Chairman of the Supervisory Board Petr Moos said that the board did not discuss the intent yet, refused to comment it further. Škoda Transportation reacts in similar manner. “We do not comment on business relations,” spokesperson Lubomíra Černá said.

ČD considered different plan initially – CEO Miroslav Kupec presented the information that PPF offers Pars nova subsidiary for sale at the July the Board of Directors. He suggested to express an interest in buying the stake. The result of this move was the letter from Škoda with offer to create a joint venture.

The plan fits into strategies of both companies: ČD want to invest more into rail repairs, Škoda follows the same intent. Thus they talk about possible joint venture created by Pars nova (Škoda Transportation subsidiary) and DPOV, rail repair subsidiary of ČD. Such company would hold majority on rail repair market.

The cooperation of the Czech Railways and Pars nova is far from ideal. The most significant problem is quality of passenger cars for Prague – Berlin – Hamburg route that Pars nova renovated. ČD are fined by Deutsche Bahn for technical defects on cars, and the trains are accompanied by a technical staff fixing the defects during the journey.

Czech Railways are key customer for Škoda Transportation. They received most contracts from ČD in calls for tender where only the single offer was submitted. Alstom and Bombardier has already objected terms of last tenders for new trains this year. None of objections was accepted – complain from Alston was rejected by antitrust office, complain from the head of Bombardier on electronic multiple unit tender was rejected by the board of ČD. The current ČD CEO Miroslav Kupec was employed by Škoda Transportation in the past.

The PPF group also has different business with ČD – they bought 29 % of ČD-Telematika in May this year. ČD holds majority stake in the company.

Czech version is available at Zdopravy.cz.

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