Austrian Railways to take over Hungary's rail cargo traffic

Austrian Railways have stepped up their involvement in eastern Europe, and have taken over all the cargo traffic handled by MÁV, Hungarian Railways' cargo subsidiary.

Cooperation between Austrian Railways and Raab-Ödenburg Railway

Austrian Railways will be handling this rail cargo transport business in collaboration with the Austro-Hungarian Raab-Ödenburg Railway company (RoEE). In May 2007, the two companies formed a bidding consortium consisting of Austrian Railways subsidiary Rail Cargo Austria (RCA) and Raab-Ödenburg RoEE to win an international tender for MÁV's cargo business. With a takeover offer of EUR 398 million (HUF 102.5 billion), they considerably outbid 12 other rivals. Raaberbahn RoEE has a 9 per cent stake in the successful consortium, and its share in the new company may even be increased, according to RoEE president András Szabó.

Austrian Railways double offer and guarantee jobs - press: price excessive

A few days before the award was announced, the RCA-RoEE consortium doubled its original offer, thus outbidding its nearest rival, the Slovakian Slavia Capital company. The Slovakians' last bid totalled EUR 344 million. The Hungarian media considered the purchase price of almost EUR 400 million excessive. They quoted privatization consultants, according to whom MÁV Cargo would have been worth only EUR 200-240 million (HUF 50-60 billion). Hungarian State Railways MÁV themselves had expected that a price of EUR 300 million (HUF 80 billion) would be achieved.

The railways union expressed its preference for the Austro-Hungarian consortium, as the offer included a guarantee that MÁV Cargo's 3,170 employees would continued to be employed. The consortium also made a binding offer of five per cent of the shares in MÁV Cargo for employees at half the current market price.

Austrian Railways to handle 83 per cent of Hungarian rail cargo traffic

RCA press spokesman Thomas Berger confirmed that the new Austro-Hungarian partner companies would be able to operate more efficiently in south-eastern Europe in the future. MÁV Cargo previously handled 83 per cent of Hungarian goods transport by rail, and had a share of nearly 20 per cent of Hungary's total goods traffic. In the year 2006, MÁV Cargo reported a turnover of EUR 368.2 million and a profit before tax of EUR 11.1 million. In the same period, RCA generated turnover of EUR 2.25 billion and an operating result of EUR 42.6 million with 8,237 employees. As a result of this merger, Austrian Railways has been able to double its rolling stock to 26,000 goods wagons. However, according to MÁV Cargo manager Gábor Dióssy, they will first have to modernize the 13,500 mostly outdated Hungarian wagons and the IT systems.

Approval of Gyurcsany government certain - opposition protesting

According to Népszabadság, Hungary's biggest daily newspaper, the social-liberal government in Budapest under premier Ferenc Gyurcsany is likely approve the cargo deal with Austrian Railways. It has even undertaken not to increase usage charges for the railway network for the next two years. What is more, the government also intended to let MÁV retain the entire purchase price payable in the first half of 2008 for modernization purposes. The earliest possible date for the signing of the contract is likely to be the beginning of January 2008.

Fidesz, the national-conservative opposition party, is against the sale of MÁV Cargo to the Austrians. As long ago as last summer, Fidesz called on the Gyurcsany government to stop this privatization. One-off revenues did not justify the same of strategically important indsutriies, explained ex minister of transport János Fónagy. The national-conservative press warned that once again - as with OMV's as yet unsuccessful takeover attempts with the oil company MOL - a nationalized Austrian company once again had its foot in the door, intending to exert an economic influence in Hungary to the disadvantage of the Magyars.

 

Links

http://www.mavcargo.hu/ http://www.railcargo.at/