Italo signs €3bn Siemens deal for expansion into German rail market

Italian rail operator Italo has signed a €3 billion ($3.4 billion) contract with train manufacturer Siemens Mobility, bringing it a step closer to entering the German long-distance rail market.

The contract covers the delivery of 26 high-speed trains, with the option of a further 14 trains, Italo said on Monday. 

The trains are the Siemens Velaro Multi System, which are closely related in design and appearance to the ICE-3 and ICE-3 Neo trains used by Germany's Deutsche Bahn. A 30-year maintenance contract has also been signed with Siemens, the company said.

Italo said its total investment for the market entry would be around €3.6 billion. In addition to procuring and maintaining the trains, this includes the cost of recruiting and training around 2,500 employees as well as investment in stations and IT infrastructure.

"We want to offer passengers in Germany greater choice, more frequent connections, fair prices and high-quality service," said Italo chief executive Gianbattista La Rocca.

Italo said it plans to operate on two main corridors from 2028: Munich-Cologne-Dortmund and Munich-Berlin-Hamburg. "This will connect 18 cities across a 1,300-kilometre network with a total of 50 daily services," the company said.

Rail industry alarmed

Italo's plans have raised concerns within Germany's rail sector. Trade unions, passenger groups and Deutsche Bahn have warned that introducing another operator on an already congested network could reduce capacity for both long-distance and regional services.

Italo had lobbied Germany's Federal Network Agency for improved access conditions for new entrants. The regulator subsequently ruled that at least 25% of capacity on heavily used rail corridors must be reserved for competitors to Deutsche Bahn.

State-owned Deutsche Bahn currently accounts for around 95% of Germany's long-distance rail market. Its only significant competitor to date is Munich-based transport company Flix.