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Interview with Daniel Kurucz, Chairman of the Board and CEO, Czech Railways

Daniel Kurucz , chairman of the board of directors and CEO of Czech Railways, began his managerial career in the 1990‘s. He worked in many multinational enterprises e.g. Japanese Fujifilm, Carborundum, Swedish Engineering company Sandvik AB, and in Agrofert Holding. He also led companies in India, China, Canada and the USA. Last year he became the executive director of operations and technology in the joint-stock company Czech Railways, and he became the Chairman of the Board of Directors. He has been leading the company since February.


Mr. Director, in early September the media reported that Czech Railways had an “earnings surprise”. Were you surprised too?

“We would be bad managers if we were surprised. We follow the plan and continually monitor the results. But it is true, that our performance worked out even better than we expected.”

Do you consider the current significant turnover in operations as an “ultimate recovery from the downturn”? Or do you expect a further uptrend in the performance of Czech Railways?

“The group now realizes profits of 158 million Czech crowns. I consider this a great achievement, the result of hard work, savings and better sales. Besides passenger transport, all of the companies of the ČD Group are showing a profit. I would like to emphasize that the improvement in results of the ČD group was due to participation of passenger transport, which showed an annual gain of 432 million. We realized about 137 million more on fares. Passenger transport remains at a loss no matter how we manage to improve the results (from last years -644 Million Crowns to an annual -262 Million Crowns). This is if we are talking about international accounting standards, of course. According to Czech accounting standards, the joint-stock company Czech Railways, our mother company, only shows a loss of 22 million. Naturally I perceive this as a step in the right direction, but it is necessary to continue to rationalize and search for new opportunities to increase sales. We must even do this from our other business activities.” 

Savings for legal services, or in overhead costs, don't affect passengers

directly. How complicated is it to save in order that a client can realize the savings?

“We cannot cut back on service nor maintenance. In fact it is the opposite. Even in the maintenance of vehicles, we spent about 150 million Czech crowns more than we planned, due to better results. We can save on overhead costs, partly on personnel costs as well as on oil and traction energy. Thanks to the “recompeting” of tens of supplier contracts, we realized lower prices of materials and services, including awards of electricity and oil. The deployment of new vehicles also helps us. Their consumption is lower and they are not that troublesome. When we talk about electricity, we would prefer to not have to pay a fee for future renewable sources. We pay around 350 million crowns annually and e.g. German Deutsche Bahn are exempt from the fee in their country. Therefore, we have joined the initiative of large companies seeking an exemption. Sparing is also possible when dealing with a small schedule. I have recently given an example of the needless overheating of lighting in the depots. If you calculate this into the entire network, we are talking about millions.”

Do you consider yourself as a crisis manager?

“I have headed big companies in our homeland and abroad. All of them had problems and we were successful in solving them. In ČD I profited from my previous experiences in the industrial companies. In many aspects it is similar as in the steelworks, or in the chemical industry. Maybe the only difference is that the state behaves differently toward a joint-stock company than toward a private owner.”

What is your biggest challenge?

“My biggest challenge at this time is to built an ambitious but realistic business plan for the year 2015. The work strategy of the group ČD up until 2020 is very necessary, which partly includes the selling of railway stations to infrastructure managers, bond issues, and the solving of historical burdens such as legal cases and development projects.”

You are the sixth general director of the joint-stock company České Dráhy. What should passengers associate your name with in the future?

“I want to achieve a profit in passenger transport for ČD, as well as reduce the quarterly debt. That is the target of our strategy up to the year 2020. However there is still a long journey ahead of us, and this depends on my opportunities to make these goals come true.”

You have been at České Dráhy since 2013. After less than one year you were promoted to the leading position. How difficult was the decision to accept that much responsibility for the entire company?

“When I was approached with this offer to lead České Dráhy, I knew the company already, which helped me. I knew that I would have a lot of work to do, but from my experiences in sports, I am used to a good fight. It was just a big challenge for me and I accepted it. I am ready to win (if I get the opportunity, of course).”

What should České Dráhy be most proud of?

“We are especially proud of the significantly better annual financial results of the entire ČD group, so that means passenger transport. In passenger transport we have reduced losses of 382 million CZK, we avoided a major reduction of our workforce, and we increased our savings on the maintenance costs of vehicles. We should be proud of carving out longstanding contracts for operating in Prague – Berlin – Hamburg, even if this seemed to be almost definitely lost one year ago.”

Why should people travel by train? What is your answer to this question for managers traveling across the Czech republic?

“Try it! You will see it’s cool. You can do a lot of work on the train or you can just relax. To Ostrava or to Olomouc I would only go by Pendolino. Otherwise you can go by Pendolino to Pilsen, Cheb or to Františkovy Lázně. To Brno we deploy Railjets, so why go there by car? Comfortable EuroCity trains also go to Ústí Nad Labem. To Slovakia you can go by a motorail and save a long way on the roads. No need to be confined just to long-distance trains. In recent years we have largely invested in regional transport. Just around Prague it is ideal to travel by the CityElefants. They are airconditioned and also have a first-class, where you can work peacefully.

are your results affected by the reconstruction of highway D1?

"I can’t assess this in financial results. It is true that we attribute our revenue growth in ticket sales to the increasing performance of transport. In other words, passengers travel with us for a long distance, so they spend more on tickets. This of course applies to connections to Brno and Moravia in general. Interest in trains however grows mainly through better services and more modern vehicles. Passengers are gaining confidence in us again. "

a “decline” in passengers after the completion of this crucial highway affect Czech Railways?

"No, because all trains to Vienna will now be via  new Railjets, and meanwhile we are deploying the comfortable new Eurocity trains to Slovakia and Hungary. All of them stop in Brno. In Ostrava we are already running only good trains and Pendolinos. On the contrary, I think many people will prefer travelling by train. It is comfortable, and unlike the road it’s safer "

What is the most “czech” thing about Czech Railways ?

"A certain kind of " Švejkovství ", which indeed is generally true of the Czechs, and the tendency to improvise."

What is the biggest difference between the management of a purely private company and a national rail company?

"The difference is that a private company has a clearly specified owner, and the target is always to maximize profits. Conversely, the national carrier performs, inter alia, the role of public serviceability of the state, and its largest customers are public sources, such as the Ministry of Transport and regional self-governments. On the other hand, the company Czech Railways is a standard joint-stock company. And if everybody will understand and respect this, I don’t see any significant difference in the style of management."

Mr. Director, who do you consider a typical leader?

"In leadership I have many years of experience, not only in the Czech Republic, but also from Sweden, the USA, India, and China. The idea of an ideal leader varies by area. But when I summarize it, the answer for me is this: it is necessary to distinguish between a manager and a leader. A manager is formally an acting leader, who frequently uses his powers of a given position, and assigns tasks. But a leader is a person working primarily with ideas, motivation and self-reflection. It is a person always willing to help, to advise, has a participative style, and is not afraid to delegate. He builds trust in his colleagues. The difference between a manager and a leader is identified by the mood of the people in the company. Leaders do it "a bit naturally." My model in leadership was my superior in the enterprise Samdvik AB, Mr. Lars Thoren. "

In conclusion, when was the last time you traveled by train?

"I take the train all the time. Without knowing your business, you can not lead in it. Likewise, sometimes I'm up early and I go to take a look at depots, to see with my own eyes how things go there. Sometimes I'm excited and sometimes I see the need for improvement. "

By: Jaroslav Kramer
Source: Leaders Magazine 

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