Abellio

Abellio Transport Holding BV and ATH Rail Transport Beteiligungsgesellschaft GmbH (collectively: Abellio) are wholly owned subsidiaries of NS and active in the passenger transport market in the UK (until 28 February 2023) and Germany.

The newly formed entity Transport Holding Germany BV regained control of the restructured German operations (WestfalenBahn, Abellio Rail Mitteldeutschland and service provider PTS) in the course of 2022, following the completion of insolvency proceedings. On 28 February 2023, Abellio Transport Holding BV sold its investment in Abellio UK (Abellio Transport Group Ltd and its group companies) to the incumbent management via a management buyout.

Management Buyout of Abellio UK

Abellio UK generated cumulative profits and contributed positively to NS’s results. However, market conditions in the British railways have been challenging at times, especially given the relatively unstable political context and unfavourable economic situation in recent years. NS received a cumulative dividend of around €230 million. The revision of the strategy for foreign operations in 2018 meant that Abellio UK was no longer of strategic importance to NS. Since then, NS has been working towards exiting the UK market. This took some time, due to the uncertain UK public transport market, the effects of the COVID-19 pandemic and NS’s outstanding guarantees for British rail contracts (originally for around €0.5 billion).

Since 31 May 2022, Abellio Transport Group Ltd and its group companies have been classified as ‘assets and liabilities held for sale’ and are no longer consolidated. Abellio UK’s net result has since been accounted for in the annual report as ‘result from discontinued operations’. The transaction was completed on 28 February 2023 with the transfer of the shares to Transport UK Group Limited, a British entity owned by local management.

Following completion of the transfer, the British management will oversee settlement of the terminated franchise agreements, including NS’s remaining outstanding guarantees for these franchises of around €0.3 billion as at the date of the transfer and remaining claims on NS’s behalf. NS has retained a share with special rights (‘special share’) in Transport UK Group Ltd to ensure the orderly resolution of outstanding items. Full settlement of latent receivables and liabilities is expected to take until at least 2025. In 2023, NS received €54 million as repayment of loans and receivables that had been successfully settled. As of 31 December 2023, NS had a claim on outstanding loans of €119 million and outstanding guarantees of around €0.2 billion relating to the three terminated franchises in the UK: Greater Anglia, East Midlands and West Midlands. Most of those outstanding guarantees are expected to be released by the UK Department for Transport in 2024, after final settlement of the old franchise agreements.

Restructuring of Abellio Germany

The German regional transport market has been difficult to operate in. This is due not only to the aftermath of the COVID-19 pandemic, but also to other external factors beyond the control of carriers, such as an increase in trackwork. These have led to replacement transport costs, fines for not meeting punctuality performance targets and service cancellations. Collective labour agreements for train crew and labour market developments have also resulted in higher staff and training costs. These cost increases are not sufficiently covered by the transport agreements indexation mechanism and are not otherwise compensated. Abellio Germany is therefore likely to face losses in the long term, until the end of the franchise agreements in 2032. This situation was not sustainable without significant financial support or the adjustment of transport agreements. Abellio Germany’s shareholder financed the losses on the assumption that a long-term solution would be found for these structurally loss-making franchise contracts. In July 2021, after negotiations with major public transport authorities had failed, Abellio Germany initiated Schutzschirmverfahren (special insolvency proceedings under German law) to find a viable long-term solution by restructuring the activities and loss-making contracts of all entities of Abellio Germany. These insolvency proceedings offered the opportunity to work on an entity-by-entity solution with the major public transport authorities, rather than a solution for the Abellio Germany as a whole.

Over the course of 2022, the restructuring process for some of the operational entities was completed and the shares of the entities concerned were acquired by a new German holding company within the NS Group (ATH Rail Transport Beteiligungsgesellschaft Deutschland GmbH), headquartered in Berlin. With the completion of the insolvency proceedings, financial control was regained over PTS GmbH (from 1 February 2022), WestfalenBahn GmbH (from 1 March 2022) and Abellio Rail Mitteldeutschland GmbH (from 1 July 2022). WestfalenBahn will continue to operate the Emsland and Mittelland contract until the original end date in December 2030, and Abellio Rail Mitteldeutschland will continue transport services within the STS network until the same date (December 2030). The loss-making DISA contract will be terminated early (in December 2024 instead of 2032) under the restructuring agreement with the public transport authorities. In summer 2023, the public transport authorities in central Germany announced that the railway company Regionalverkehre Start Deutschland GmbH will take over transport on the diesel network in Saxony-Anhalt (DISA) from Abellio in December 2024. This was preceded by a call for tenders issued by the public transport authorities in which, as agreed, Abellio could not participate.

The operations in North Rhine-Westphalia were terminated, and in February 2022 the contracts were transferred to various carriers designated by the public transport authorities, as no agreement was reached on additional compensation for these contracts. The entity in North Rhine-Westphalia (Abellio Rail NRW) will be liquidated by the trustee. The Baden-Württemberg entity was taken over by state-owned operator SWEG in 2022 after a failure to agree with the public transport authorities on additional compensation for the Stuttgarter Netz contract.

In July 2023, a settlement was reached with the trustee of the former German holding company, Abellio GmbH, which was approved by creditors. The insolvency/restructuring procedure for Abellio GmbH is expected to be completed in 2024, after approval of the insolvency plan. NS will review its strategy for its remaining operations in Germany.

To date, NS has invested €460 million in Abellio Germany (including its financial contribution to the restructuring). As of 31 December 2023, NS/Abellio has outstanding guarantees of €118 million in respect of Abellio Germany.