Kern says ‘final chance’ to save ÖBB is now

Federal Railways (ÖBB) boss Christian Kern has claimed now was the “last chance” to get the debt-stricken firm back on track.Kern said today (Thurs) he expected developments similar to the processes in the aviation industry to occur in the railway business. The ÖBB CEO – who took up office in June – also referred to German firm Lufthansa’s takeover of Austrian Airlines (AUA) last year.Asked whether this meant ÖBB would be owned by German national railway company Deutsche Bahn (DB) in 10 years time, he told Austrian newspaper Die Presse: “I wouldn’t say we either turn ÖBB into a role model company or it belonged to DB. But now is definitely the time for the final chance.”Kern stressed ÖBB staff must be “more flexible” as far as taking on jobs somewhere else within the firm which match their skills. He also made clear the state-owned company will have to do with fewer employees if it wanted to survive. Speaking about where cuts would be made, Kern said: “We must start in the administration-managing departments.”ÖBB has been in the red for years, and crucial management decisions have been overshadowed by political interferences as the Republic of Austria holds a major share in the company. The situation is similar regarding other firms which are owned or close to the state like motorway authority Asfinag and electricity provider Verbund.Kern, who is close to the Social Democrats (SPÖ), succeeded Peter Klugar. The former Verbund board member recently promised “total transparency” at ÖBB after it emerged that previous executive boards spent millions of Euros a year for legal advice.ÖBB suffered losses of 46 million Euros from January to July of this year, and Kern made clear a “total turnaround” in decision-making policies was essential to rescue the company from going bust.He caused some firm-internal controversy by announcing plans to reduce the number of leading positions in the company by around 100 shortly. ÖBB has been criticised by independent business analysts for years for employing around 1,200 staff in leading positions.Its overall number of employees of 42,000 is also considered as being too high to get back in the black. Swiss Federal Railways (SBB), which operates around as many trains and connections as ÖBB, have only around 14,000 staff. Around 43 per cent of overall expenses ÖBB must come up for are to meet staff incomes.Speaking about upcoming redundancies, Kern made clear: “We’ve got many good employees. Everybody who performs well doesn’t need to worry. But we need to make sure to get the best for every job at ÖBB.”People’s Party (ÖVP) officials angered SPÖ leaders by calling for a dramatic reduction of subsidies for ÖBB as the government negotiates how to lower the budget deficit and state debt over the next few years.It even emerged ÖBB supervisory board head Horst Pöchhacker assigned SPÖ MP Hannes Jarolim’s law office to create an expert opinion on whether ÖBB can take political decision-makers who harm its reputation to court.The assignment was considered as an attack against ÖVP financial issues state secretary Reinhold Lopatka who has called for pay freezes for ÖBB staff for months. Kern cancelled the order for Jarolim when Pöchhacker’s plans leaked to the press.ÖVP traffic and infrastructure spokesman Ferdinand Maier infuriated SPÖ bosses by asking SPÖ Infrastructure Minister Doris Bures in parliament whether she contracted Jarolim or had been informed about the assignment for such an expert report.SPÖ general secretary Günther Kräuter worsened the climate in the quarrelling coalition by asking ÖVP Finance Minister Josef Pröll to step in and order Lopatka to stop from damaging ÖBB’s reputation further.He said: “Lopatka’s attacks harm the Austrian economy.”Lopatka however refused to stop criticising ÖBB. He said about the firm’s new boss: “Kern is in charge for more than 100 days now. Have there been any precise actions so far? I don’t see any reforms happening. Announcements won’t be sufficient.”Kern reacted by saying: “Lopatka is sometimes right, but his attacks are often politically motivated.”Speaking about how he planned to lead ÖBB, Kern – who earns around half a million Euros a year – said: “We must stop assuming that we (ÖBB) get money from the state.”Kern faces a “hot autumn” of payment structure negotiations with the company’s powerful works council.ÖBB staff representation head Wilhelm Haberzettl said last week he saw a chance for a pay rise for employees despite the widespread opinion ÖBB must make cuts in all of its departments to survive. ÖBB staff retire at an average age of 52.He told the Salzburger Nachrichten newspaper: “An income increase of one per cent would cost the company 19 million Euros (a year). In contrast, ÖBB (annually) spends 14 million Euros on legal advice.”The SPÖ MP attacked ÖBB for daring a risky investment cooperation with DB. ÖBB was forced to coughed up around 300 million Euros to exit the deal to avoid further losses last year.Haberzettl said: “I would accept that there is no chance for higher wages this year – if things had been great and we were just unlucky in 2009. But if it’s possible to splash 300 million Euros following gambling losses and to pay compensation to departing managers, humble rail workers lack understanding.”The head of ÖBB’s works council however assured there would be no strikes if the ÖBB board denied his calls to up wage rates. Haberzettl said: “I don’t think customers must brace for strikes. I’m positive there’ll be talks full of reasonableness and a solution.”