Ukraine’s railway monopoly Ukrzaliznytsia has suffered big financial losses during the pandemic, carrying fewer passengers and less cargo.
The company’s net loss last year widened to $426 million compared to $107 million in 2019, according to its financial report published on April 9.
Income generated from passenger transportation decreased by 58% from $355 million in 2019 to $148 million in 2020, the report said. Income from freight transportation declined by 22%, from $285 million in 2019 to $220 million in 2020.
Currency volatility was a major factor in the company’s poor performance, leading to $197 million in losses in 2020.
Last year Ukrzaliznytsia spent less on salaries, electricity, fuel and repairs. However, it spent $14 million more on pensions for employees entitled to early retirement due to hazardous working conditions, compared to the previous year.
To cover its losses, Ukrzaliznytsia plans to issue eurobonds this year. The company’s first priority is to borrow from international banks but it’s also considering borrowing from state banks.
For years, Ukraine’s largest state-owned enterprise has hovered on the verge of bankruptcy, mired in corruption scandals and grossly overstaffed, with nearly 250,000 total employees.
Despite the multimillion losses during the quarantine, the Ukrainian government refused to help the company financially.
Much of the country’s 40,000 kilometers of passenger and freight railways are neglected. Ukrzaliznytsia’s routes and equipment are outdated and in dire need of modernization.
The company itself struggles with corruption scandals and mismanagement.
On March 17, the Cabinet of Ministers fired Volodymyr Zhmak, the head of Ukrzaliznytsia for allegedly lobbying oligarch Rinat Akhmetov’s interests and making decisions that violated the company’s statute.
