Rail freight operator Lineas in serious financial trouble

Rail operator Lineas, Europe’s largest private freight operator headquartered in Belgium, lacks funds. Without an additional injection of at least 50 million euros, bankruptcy is looming for the company, of which the Belgian government is a shareholder, so write business newspapers De Tijd and L’Echo.

Belgian federal Mobility Minister Georges Gilkinet (Ecolo) wants the government to intervene. “Letting the company go bankrupt is not an option. Otherwise, the port of Antwerp risks falling flat,” he says.

Cash-flow problems

Lineas started looking for 100 million euros of fresh capital late last year. In spring, the loss-making former freight subsidiary of NMBS/SNCB already received 20 million euros from its two shareholders, French investment funds Argos Witty and SFPIM, the federal government’s investment fund.

In spring 2022, Lineas also appointed Bernard Gustin as its new CEO. Geert Pauwels resigned because of poor financial performance, partly caused by the coronavirus pandemic and floods in Wallonia.

Yet the rail freight company has cash-flow problems again, writes De Tijd/L’Echo. Hence, the dossier lands on the government table on Friday.

Debt of almost €300 million

For Gilkinet, rail freight transport is a crucial link in the modal shift and an essential lever in Belgium’s goal to double the volume of rail freight transport by 2030. But the government is reluctant to jump over the breach with money again.

Lineas, a company with 2 100 employees, has struggled with red figures for years. Last year, it suffered a net loss of 100 million euros on a turnover of 443 million euros, with debts of 290 million euros.

Less freight transport

Letting Lineas go bankrupt is not an option because it forms a crucial link in freight transport from the port of Antwerp, for which there is no alternative in the short term. However, the question remains whether a new capital injection from the government would violate European state aid rules.

Rail freight transport in Belgium fell by 7,5% last year, compared to 2021. At almost 58,3 million tons, freight transport landed at its lowest level in six years.

Road support more subsidized

According to Paul Hegge, representative of the Belgian Rail Freight Forum, which unites rail freight operators, the drop came because of the removal of federal support for dispersed transport – bringing together goods from different companies to form one cargo train.

About 4 million euros of support from the Flemish government and the ports for freight shuttle trains between the ports were also stopped. Both led to scrapped trains, higher costs for operators, and higher prices for companies, which meant they had no incentive to opt for trains.

Moreover, freight transport by rail became relatively more expensive than by road as electricity prices rose faster than diesel prices. The industry has been arguing for a level playing field with road transport, which they say is much more subsidized. In recent years, for example, Belgium gave almost 3 billion euros in subsidies to companies that fill up with diesel here.

A dozen rail freight operators operate in Belgium, with Lineas thus being the most significant player (plus minus 58% market share).