Photo: Marc Ryckaert, CC BY-SA 4.0, via Wikimedia Commons

Recovering Belgian rail freight operator Lineas in need of major cash injection

Despite seemingly being on a path to recovery in recent times, Belgian rail freight operator Lineas is still need of a major cash injection in the next 6 months. The company's first choice is to secure private investment, but given the strategic importance of the rail freight operator, Belgium's federal government is said to be ready to step in.

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According to multiple reports in the Belgian media, Lineas has been seeking a capital injection of €80 million for the last 6 months. De Tijd reports that the money should preferably be available before the end of 2023, and no later than Q1 2024.

The government, which owns 35% of the shares in Lineas, had already provided €20m in May. At the same time, Lineas’ main shareholder, French investment fund Argos Wityu, also provided €20m.

It is said that the additional funding is needed to absorb losses recorded in recent years (a €76m loss was recorded by the company in 2022, but should be halved by the end of this year) and to invest in digitalisation and extra rolling stock.

As reported by Belgian industry media portal Transport Media, Lineas has significantly improved its operating results over the last 12 months. Lineas’ bank debts have been repaid, EBIT is no longer in the red, and losses are likely to be halved by 2023 in line with the company’s recovery plan. The problem, writes Transport Media, is more one of liquidity.

Amid reports of the government meeting to discuss funding for Lineas, the company’s CEO, Bernard Gustin, told De Tijd that Lineas had not actually approached the government. Gustin added that he was still hopeful of securing private investment.

“It is our plan C,” said Gustin, referring to the reports of state funding. “I did not ask the government for additional support and did not know that the file is on the agenda of the federal ministerial meeting [to be held tomorrow].”

Plan A, as Gustin explained, is to find one or more new private investors. If this is not possible before the end of Q1 2024, Lineas’ Plan B is to request a bridging loan from its banks. Only once these options have been exhausted will state funding be considered.

Gustin told De Tijd that discussions are being held with about 15 interested investors, some of which are “at an advanced stage”. He added that “good progress” had been made with the recovery plan, and that he was confident the plan could be accelerated.

According to the Lineas CEO, the company is on course to break even in 2024 – one year earlier than it had planned. He also believes that the European Commission’s investigations into illegal state aid will lead to a “more level playing field” in the sector.

The troubles being experienced by Lineas are not unique in Europe’s rail freight sector – despite the highly publicised push to get freight on rails.

In the UK, the cancellation of a significant portion of HS2 has been considered by logistics trade bodies as a real blow to future rail freight capacity.

Meanwhile, over in France, SNCF’s Fret is facing huge changes due to the European Commission investigation referred to by Gustin. The French Government is reportedly seeking to negotiate a compromise that would entail winding up Fret SNCF in its current form.

Things aren’t exactly rosy in Germany either, where DB Cargo is also suffering from losses and appears set to make significant numbers of workers redundant.


Photo: Marc Ryckaert, CC BY-SA 4.0, via Wikimedia Commons