Ivkoni Express plans €100 million in railway investments

Private rail carrier Ivkoni Express plans to invest €100 million over the next 12 years, during which it will transport passengers on rail routes in the so-called Northern and Southern lots. The company announced this in written responses to questions from Economic.bg.

Rolling stock

With regard to rolling stock the company is exploring the “European secondary market for the purchase and rental of rolling stock” with the aim of ensuring sufficient reserves and flexibility. We would like to remind you that the company will operate 15 multiple units under the Recovery and Sustainability Plan (RSP) and part of the state fleet acquired after 2009.

With regard to Ivkoni Express’s own investments in rolling stock the company is currently completing a technical and financial analysis of the resources required based on the volume of service, the delivery schedule for the new state-owned rolling stock and the requirements for quality and reliability of operation.

When asked about the quantity of rolling stock involved the company stated that “the process is in the evaluation stage and no final decisions have been made yet, so we cannot specify a specific number of units at this stage.”

Pricing of the service

The issue of the 3.57% profit margin is key, but it is often misinterpreted as a potential increase in costs for passengers. However the company is adamant that “this percentage does not represent a ‘mark-up on tickets’ but rather an indicator set by the contracting authority for the level of profit that the rail operator can achieve when providing the services.”

The company has conducted a financial and economic analysis of the performance model, including the compensation mechanism and contractual restrictions, to ensure the sustainability of the service while complying with the contractual parameters and quality and safety requirements,” Ivkoni Express said.

The operating model is based on the net financial effect, whereby the state compensates for the difference between ticket revenues and actual costs. For passengers the most important news is that no “independent pricing decisions” outside the state tariff policy are envisaged.

Any future changes to tariffs could only be made in compliance with the contractual mechanisms and in consultation with the competent state authorities."

Own ticketing system

One of the big challenges is how we will buy tickets after December 13, 2026. Ivkoni Express is considering options for the “gradual introduction of its own sales organization,” which will include online channels and physical locations. However the company does not rule out the possibility of a pragmatic partnership with the state carrier.

Various options are currently being analyzed, including the possibility of using existing commercial infrastructure (note: the BDZ ticket office network) during the transition period, subject to agreement between the parties."

Voluntary transfer of staff

The transfer of about 800 BDZ employees is a process that is important for ensuring transport in the regions in question. When the contracts were signed it became clear that the transfer would be voluntary and no employee would be forced to change their place of work. That is why the media asked us what steps the company is taking to attract these employees and whether additional social packages (insurance, bonuses, training) are planned.

Our goal is not to “attract” through extraordinary incentives but to provide a secure working environment, clear rules and professional prospects. We are convinced that predictability, fairness and long-term commitment are the most important factors for a successful and voluntary transition for employees."

Ivkoni Express emphasizes that employment relationships will remain under the same conditions — retaining remuneration, seniority, social benefits and applicable collective agreements until new ones are concluded.

As a new employer Ivkoni Express cannot have more or different rights under the employment contract than those of the previous employer, nor can it unilaterally change the agreed terms."

The operator is committed to “predictability, fairness and long-term commitment.” In addition a schedule is being prepared for information sessions by region.

During the meetings, “we will provide clear information about the terms of the transition, the organizational structure and the development plans so that each employee can make an informed decision.”

First of all we would like to emphasize that we expect the transition process to proceed smoothly and constructively."

When asked what the plan B is if employees refuse to transfer the company states that “the company is prepared to take the necessary organizational and personnel measures if necessary, including the gradual recruitment and training of staff, so that the continuity of service is guaranteed.”

However our main goal remains to build trust and partnership dialogue so that the transition can take place with the participation of as many of the current specialists as possible.

Risks to the business model

When asked what the biggest technical risks are according to the company’s analysis, given the launch of the service on December 13, they say that they are “related to the coordination of the transition between operators and the timely provision and commissioning of rolling stock. Another important factor is adherence to the delivery schedule and actual commissioning of the new rolling stock financed under the PUV.”

The operator emphasizes that success also depends on “the current technical condition of the rolling stock and its ongoing maintenance, the current technological organisation of repairs and planned maintenance of rolling stock, which a certified structure should carry out, including the provision of the necessary repair capacity, technological readiness and availability of spare parts, so that reliability and continuity of operation are guaranteed from day one.“

We would like to remind you that BDZ-PP and Ivkoni were selected to carry passengers following a procedure initiated by the Ministry of Transport.

Translated with DeepL.