“To ensure sustainable operations in 2026, Ukrzaliznytsia (UZ) must cover a liquidity deficit of around UAH 48.8 billion, excluding the repayment of Eurobonds, whose debt is to be restructured,” said CEO Oleksandr Pertsovsky on Friday during a presentation on passenger transport financing and the model for launching the UZ-3000 program.
“We have chosen the most balanced model to cover this deficit: part of it will be provided by our internal optimization, part by tariff decisions, and the third part by state support for passenger transport. There are no other realistic ways to get through these years in the context of the war,” he emphasized.
According to him, the amount of state co-financing for passenger transport will amount to up to UAH 13 billion in 2025 and will increase to more than UAH 16 billion in 2026.
According to Pertsovsky, operating losses in passenger transport total UAH 24 billion per year (UAH 13 billion for long-distance transport and UAH 11 billion for local transport), and while it was previously possible to offset these losses at the expense of profits in freight transport, this is impossible during the war.
According to the presentation, the expected loss in the passenger transport segment will increase from UAH 18.1 billion last year to UAH 18.6 billion this year, UAH 21.9 billion next year, and UAH 24.4 billion in 2027.
Suburban transport is expected to lose UAH 10.9 billion next year, domestic transport UAH 13.4 billion, and only international passenger transport will be profitable, with UAH 2.4 billion.
At the same time, UZ forecasts that profits from freight transport will decline from UAH 20.4 billion last year to UAH 3.2 billion this year, with a loss of UAH 0.6 billion next year, increasing to UAH 4.8 billion in 2027.
The reasons for this change in the profitability of freight transport are a reduction in volume (coal – by 4 million tons, grain – by 9 million tons after the artificial peak in 2024) and a reduction in transport distances, resulting in a loss of UAH 14.5 billion in freight revenue, as well as rising costs (personnel, electricity, financial costs) with frozen tariffs, which means an additional UAH 2.7 billion in expenses.
According to the presentation, the projected net loss for next year is UAH 28.64 billion.
In addition, the company expects UAH 25.4 billion in critical restructuring costs with depreciation of UAH 15.9 billion, UAH 6.4 billion in interest payments on Eurobonds, and UAH 4.2 billion in repayments of EBRD and EIB loans, which together result in a liquidity deficit of UAH 48 billion, according to the presentation.
As part of its own optimization, UZ has proposed an economic effect of almost UAH 17 billion in 2026, of which UAH 6.7 billion has already been taken into account in the draft financial plan. A further UAH 10.2 billion is to be achieved by reducing administrative costs, transferring non-core assets, cooperating with the freight market, and increasing its own revenues.
According to the presentation, the optimization measures include the elimination of 69 of the most unprofitable suburban routes (up to 5,000 per day), the indexation of unregulated elements (commissions, services), and flexible dynamic pricing for individual segments, which are expected to generate a total of UAH 6.9 billion.
In addition, there are plans to optimize the workforce by 8,300 employees, merge regional railways, and optimize up to 1,200 km (less than 5%) of the network with no or minimal traffic (1-2 suburban pairs).
Energy efficiency measures also include operating during intervals with the lowest fares, doubling rental income (+UAH 100 million), the sale of surplus and non-core assets, the sale of scrap metal (over 370,000 tons, which is more than UZ has sold in the last 5 years and secures the company a 28% share of the scrap market), and reducing repairs to passenger cars, regional trains, and infrastructure.
Ukrzaliznytsia points out that the financing model for passenger transport is in line with the European practice of public service obligation (PSO), whereby the state covers the difference between economically justified costs and tariffs.
Earlier this week, Serhiy Leshchenko, deputy chairman of the UZ supervisory board, told the Verkhovna Rada that the company’s net loss for the first nine months of this year amounted to UAH 7.195 billion.
According to him, UZ proposes to index freight tariffs by 27.5% from January 1 next year and by another 11% from July 1.
In January-June 2025, UZ’s export traffic decreased by 13.5% to 38.7 million tons, domestic traffic decreased by 11.7% to 35.5 million tons, while import traffic increased by 5.4% to 5.3 million tons.
Passenger traffic increased by 1.2% to 13.52 million in the first half of 2025.
In 2024, UZ increased its revenue by 11.1% to UAH 102.87 billion, but reported a net loss of UAH 2.71 billion, compared to a net profit of UAH 5.04 billion in 2023.
The volume of export traffic of JSC Ukrzaliznytsia in January-June 2025 decreased by 13.5% to 38.7 million tons, domestic traffic by 11.7% to 35.5 million tons, while the volume of imports increased by 5.4% to 5.3 million tons, the company’s CEO Oleksandr Pertsovsky reported on Facebook.
“In the first half of 2025, Ukrzaliznytsia transported 79.6 million tons of cargo, which is 11.8% less than last year. With this trend continuing throughout the year, the annual figure will be approximately 50-52% of the freight volume in the period before the full-scale invasion (2021). We are currently experiencing the lowest load in the history of the railway, which is extremely painful for the company’s ability to function, as freight traffic has always been the main source of income for the railway,” he said.
Percovsky clarified that the largest decline was in the transportation of coal, which fell by 27.5% due to the loss of mines and the deterioration of the security situation, and grain and milled products, which fell by 32.5%.
“Farmers point to the late start of the season, so we are counting on some levelling off later in the year (more shipments went out in July). Fair rules of the game are also important: we are working closely with the State Railway Transport Inspectorate on stricter checks of weight limits so that grain is not transported to ports in violation of weight limits, ‘killing the roads’ with trucks,” said the CEO.
According to him, the company managed to work with customers in the construction industry, and against the backdrop of some market revival, construction transportation of building materials increased by 4% and cement by 10%. However, as Pertsovsky emphasized, the current ultra-low tariffs for this group of goods do not add to UZ’s profits.
The CEO explained the growth in imports by the work of colleagues from the commercial team, who were able to convince important players in the fuel market to try rail services and use our logistics with our subsidiary UZ Cargo Poland.
As for transit, it is almost non-existent in the context of the war with Russia, although the company is taking its first steps towards building multimodal routes, Pertsovsky said. He recalled that in the first half of this year, the first transit container ferries were sent to Georgia, opening up opportunities for transit to Azerbaijan, Kazakhstan, and, in the future, increasing transit volumes from China through the “Middle Corridor.”
He also said that UZ had launched a systematic survey of freight customers. “The customer loyalty index (NPS) was -27%. It’s an honest start, but it was important to record it. We have taken specific steps (in particular, in terms of digital services and work on cargo delays) and will continue to measure progress,” Pertsovsky emphasized.
Among the issues that the company was unable to resolve in the first half of the year, he mentioned the indexation of freight tariffs, which “froze at the level of mid-2022.”
“We are working to prove that there must be a balance and a fair approach to those who make it possible to sell these cargoes – our Ukrainian railway workers,” said the CEO of UZ, pointing to wage growth and investments in the company’s customers.
As reported, in 2024, Ukrzaliznytsia increased freight traffic by 17.9% compared to the previous year, to 174.9 million tons.
Last year, UZ increased export transportation by 51.2% to 84.67 million tons, imports by 40.9% to 9.63 million tons, while domestic transportation decreased by 5.5% to 80.2 million tons.
