At the end of April, Czech Railways, the Czech Republic's largest and oldest railway operator, announced its historically best financial results. The company is currently undergoing significant changes, with dozens of modern trains and new services being introduced for passengers anywhere from Cheb all the way to Mosty u Jablunkova. We had a conversation about the financial results and railway innovations with Michal Krapinec, chairman of the board and CEO of Czech Railways.
The Czech Railways group earned 3.8 billion Czech crowns last year. This is the best financial result in the history of the joint-stock company and likely of Czech Railways since 1993. In the past, such good results were mostly achieved through large asset sales. Isn't last year's result also due to massive sales?
Czech Railways are changing fundamentally and focusing on their core business. We have set three main pillars of our business: passenger transport, freight transport, and service. In addition, there are other supporting activities related to the core business, which enable better results. Here, I would include our subsidiaries such as ČD – Telematics, ČD Bus, or the Railway Research Institute. However, we are definitely not developers, and we do not want to engage in development activities, so even in 2023, we sold some surplus land. These are places that are no longer used for railway transport, but according to spatial plans, they may be used for new urban districts, among other things.
So where lies the success of the company and, consequently, your leadership?
First of all, I must thank all my colleagues – from managers to shunters and mechanics in the depots. It would be a mistake to think that it is the work of one person or a narrow group of people in the management of the company. Successful management is a collective effort, and involving all of our employees in positive changes in the company and openly communicating with them are the main priorities of our management. Only thanks to this can we say that we transported 7.3 million more passengers at a time when everything around us was getting more expensive, and people were thinking twice about spending every penny. The revenues and results of passenger transport naturally reflected the increase in satisfied passengers who more frequently use the premium first class. The results were positive after years of being in the red and reached over 600 million crowns. Freight transport also had positive financial results as usual. ČD Cargo reported a profit of over 700 million last year, which is an increase of more than 400 million crowns compared to 2022. It was not an easy year – considering the ongoing war in Ukraine and long-term structural changes in the market, such as the decline in coal transport. ČD Cargo is performing exceptionally well in the international market. It operates in seven European countries either through its subsidiaries or directly, and some of its transport happens entirely outside of the Czech Republic.
Where will the company's profits go? Will they not get squandered as so often tends to be the case in the Czech Republic?
Absolutely not, although we must also take into account our employees and the tight labor market, with its shortage of skilled professionals, including electricians, electromechanics, locksmiths, and workers in various other technical fields. However, our primary focus remains on investing in new trains. Last year, our investments exceeded 14 billion crowns, and this year, the number will approach nearly 19 billion. While these figures may be difficult for passengers to grasp, they will undoubtedly experience the results first-hand, or rather first-seat, if I may. We are introducing new trains this year, providing approximately 22,000 state-of-the-art seats across nearly 140 air-conditioned trains. In regional transit, this includes predominantly electric units like the RegioPanter and diesel units such as the RegioFoxy. For long-distance travel, we will introduce the initial eight units of the ComfortJet, slated for deployment in the latter half of the year on the Berliner interstate train. New trains go hand in hand with infrastructure investments. Previously, nearly every train could be disassembled into individual cars for repairs in specialized stations. However, modern units are integrated, spanning up to one hundred meters, which makes disconnecting them impractical. Hence, we require modern facilities capable of accommodating entire trains for comprehensive repairs. By 2031, we plan to invest over 12 billion crowns in service infrastructure, including new facilities in locations such as Cheb, České Budějovice, and Prague.
CV BOX
Michal Krapinec, a trained lawyer, began his professional career in advocacy.
He has been working for the ČD group since 2012. At ČD Cargo, he served as the secretary of the board and then took over the equity interest management and administration unit, where he was responsible for foreign expansion.
He later served as a member of the board of directors of ČD Logistics, a member of the supervisory board of ČD – Information Systems, and managed the equity interest management and administration department and the project office in the parent company.
In mid-2020, he became a member of the board of directors of ČD – Telematics, and in September of the same year, its chairman. In March 2022, he was elected to lead Czech Railways as the chairman of the board and CEO.
In his free time, he enjoys sports and traveling.
