Dynamic changes and positive growth

Czech Railways entered 2006 as a company driven by dynamic changes. Never in the history of the Czech Republic’s national railway carrier has the company experienced such tremendous dynamics, characterised by launches of new services, a massive modernisation of its fleet and infrastructure, and the primary focus on customers.

Our priorities are as follows:

• Efficient and profit oriented company offering services demanded by the customers
• Business winning company – operating successfully in the liberalised market environment – bringing its customers high additional value
• Intensive modernisation with real changes for customers – in terms of comfort growth, easier accessibility and strong customer orientation
• Keeping the position of the leading European rail transportation operator with strengthening position as the desired partner and employer

We entered 2006 with a clear-cut objective – to change Czech Railways to make it an efficient and customer-focused company that will be capable of effectively tapping the strong potential held by the competitive transport market. At the same time we entered 2006 as a proud company that knows how to offer its customers services with high added value for a good price.

Indeed, there are many ways in which Czech Railways need to improve.

Our primary goal is to run a company which operates efficiently. This year we will therefore further improve our financial management to diminish our losses gradually. Our effort to transform Czech Railways into a holding with a clearly segmented passenger and freight transport business portfolio goes hand in hand with this goal. In connection with that – I should definitely stress that the figures we have seen for the first quarter are really promising.We have over fulfilled our plans both in number of passengers transported and also in the revenue area.

We will pursue our activities under an umbrella of services focused entirely on customers.At the end of last year, we offered our passengers a brand new product – SC Pendolino. This is an exceptionally successful service: perhaps for the first time ever, Czech Railways presented an offer in which the customer was the key criterion. Never before had Czech Railways conducted such detailed research into what the customers want, how much they are willing to pay for such services, and what they expect the services to bring them.

Now – almost six months after the launch of the SC Pendolino service, we have seen that we clearly addressed a market gap. There has been a strong demand for a railway service which would offer fast, comfortable and status oriented service which would be comparable to the airline standards. The results speak strongly – we have succeeded in re-seating top managers and businessmen from their BMWs into our SC Pendolino trains and brought 30% more passengers to the Ostrava-Prague route who would have never even thought of using a train previously.

Similarly, we intend to focus on our customers’ needs and expectations as regards the other services we offer our passenger in both long-distance and regional transport.

We will continue the massive modernisation of our vehicle fleet and infrastructure this year. Our objective is that the benefits of modern technology are felt in all types of services, including local and regional lines.We will therefore also this year, put into operation, 20 series 814 Regionova motor coaches, which will not only help to enhance the culture of travelling on local lines, but will also offer the various regions an overall concept of support for tourism and rail transport. Firstly, three of them have already been put into service – including strong additional value concept for our customers – individual districts of the Czech Republic. Regionovas will not only get the new regional trains – but also a concept – which helps in promoting interesting regional sites in combination with an efficient railway transportation. Each Regionova should play a role of the flagship train promoting the region where it operates.

In Prague, debuting in the Ostrava area, we will deploy several more of the series 471 pantograph units; in these urban agglomerations suburban transport will meet the stringent transport criteria under EU standards. Our strong satisfaction with those trains has been recently demonstrated with signing another contract for delivery of an additional 30 units.

In long-distance transport on non-electrified routes, we will improve our services by deploying modernised series 854 cars, complete with a brand new concept of the series 954 driving cars. Together with the launch of Regionovas we can start speaking on the ‘driving cars era’ in Czech Railways.

Nor can we do without novelties in long-distance international transport; this year Czech Railways will receive 26 brand new Siemens cars. Thus, the higher-category cars used in EC and IC trains will be available for improving the culture and comfort of travelling on other domestic routes.

We are facing work in respect of the revitalisation of railway station buildings and structures. The Living Stations strategy, presented last year, will enter the implementation stage in many locations this year; at the same time refurbishment projects for the Prague main railway station and the Karlovy Vary railway station will commence in cooperation with Grandi Stazioni and other partners. At the same time, we are in a full swing of modernisation activities on the level of regional stations. During the upcoming weeks and months we will be opening several modernised stations in the regions of the Czech Republic and in other locations we will start our modernisation activities.

Naturally, freight transport cannot be left outside the whirl of changes either. Freight transport is a highly successful part of Czech Railways business portfolio. This is despite the fact that markedly unequal conditions exist between the various modes of transport, which will only be levelled to a certain extent once the electronic toll collection system is implemented on the country’s motorways.We have been successful in winning over certain specific types of transport from road to rail, such as timber chips, which we now move from two sites in the Czech Republic to the ·tûtí paper works. The situation is similar with the haulage of automobiles from the new automobile works in Kolín, where the building of a railway siding had not originally been envisaged at all whereas now, rail transport is the primary distribution channel for the car manufacturer. Thanks to this, we are able to relieve Czech roads of several tens of thousands of trucks a year.

Czech Railways pursues a proactive business policy in freight transport, with a view to meeting its customers’ needs as best as possible. Part of this policy is our ability to deal with our customers with the highest possible degree of flexibility, communicate with them in the modern language of the Internet, and offer them bespoke services with the maximum possible added value. Today, Czech Railways is capable of all of this, and Czech Railways freight transport is therefore a worthy facet of the changing company.

Czech Railways have always been ready to support any initiative created by the state that will support ecologically and socially advantageous railroad freight transportation instead of massive expansion of road trucks.We have had enough expert capabilities to assist in creation of solutions that will bring ecological benefits for the state and business for the customers.

In conclusion let me emphasise that the opportunity for change, and the challenges related to it, fills us with immense enthusiasm. We are committed to exploiting the full potential for turning Czech Railways into a top-class carrier, a respected employer and a transport service provider which will be the natural first choice carrier for our customers.