Ukrzaliznytsia (UZ) is expected to operate at a loss in 2026 under all scenarios, while under the base and positive scenarios the company could become profitable as early as 2027, whereas under the negative scenario profitability is expected only from 2029, according to the company's stress test conducted as part of the 2027 state budget drafting process.
The document notes that Ukrzaliznytsia's performance in 2026-2030 will depend, in particular, on the volume of state support for the company's domestic passenger transportation operations.
Under all three scenarios, state budget financing for Ukrzaliznytsia envisages 100% compensation of costs for intercity passenger transportation in 2026-2030. Under the base scenario, compensation for suburban passenger transportation costs is also forecast at 25% in 2029 and 50% in 2030, while under the positive scenario these figures would be 50% and 100%, respectively.
Under the base and positive scenarios, the company will end this year with a pre-tax loss of UAH 10.6 bln, before posting pre-tax profit next year of UAH 0.9 bln and UAH 3.6 bln, respectively, and UAH 1.7 bln and UAH 10.2 bln the year after that.
Under the negative scenario, this year's pre-tax loss of UAH 20.5 bln would narrow to UAH 3.3 bln next year and to UAH 0.5 bln the year after.
Under the base scenario, rail transportation volumes will correspond to the level set out in the financial plan, and freight tariffs, having risen 30% in August 2026, will increase by a further 15% from January 1, 2027, with subsequent indexation at 80% of the inflation rate.
Under the positive scenario, further tariff indexation would match inflation, while under the negative scenario the 15% tariff increase from 2027 would not take place, with subsequent indexation at 60% of inflation.
Under the base scenario, international passenger transportation tariffs will rise in line with inflation, while intercity and suburban tariffs will remain unchanged. Under the negative scenario, tariffs for all these categories of passenger transportation will remain unchanged.
On transportation volumes, the document refers to the financial plan without specifying figures. Under the negative scenario, freight, intercity and suburban passenger transportation volumes are lower than under the base scenario, while under the positive scenario freight volumes are higher.
On operating expenses, the base scenario envisages price growth in line with inflation, a 2% staff reduction, and 10% annual wage growth, while under the positive scenario wages would grow 15% annually. Under the negative scenario, prices rise in line with inflation, maintenance and repair volumes decrease, staff is cut by 5% with wages rising 6% annually, and a reduced work week and downtime are also expected.
The document separately notes that the base forecast envisages a reduction in capital investment due to insufficient financing, while the negative scenario envisages a minimal level of capital investment to sustain operations. Under the positive scenario, capital investment would grow 23% above the base level.
Regarding Ukrzaliznytsia's debt financing, the base scenario envisages a 30% write-off of Eurobond coupon payments, capitalization of the remainder, an 8% interest rate on new securities, and repayment of 10% of the principal in 2030.
The negative scenario envisages restructuring without any write-off of Eurobond interest, full capitalization of interest, a 8.95% interest rate, and accelerated principal repayments of 5% in 2029 and 25% in 2030, with a failure to meet obligations resulting in default in 2029.
The positive scenario envisages a 100% write-off of Eurobond coupon payments, a 7% interest rate, and additional financing for principal repayment of 10% in 2029 and 10% in 2030.
The document clarifies that the stress test does not account for budget losses resulting from state budget financing within the limits of state capital investment in renewing Ukrzaliznytsia's rolling stock and infrastructure.
The 2026 state budget currently provides for financing of Ukrzaliznytsia's capital expenditures in the amount of UAH 6.5 bln.
As previously reported, in January this year Ukrzaliznytsia refused to make $45 mln in coupon payments on its 2026 Eurobonds, with an 8.25% rate and $703.2 mln in outstanding volume, and its 2028 Eurobonds, with a 7.875% rate and $351.9 mln in outstanding volume, and announced its intention to launch a comprehensive restructuring of its bond obligations with the involvement of financial and legal advisors.
The company cited the continuing decline in freight transportation revenue amid falling volumes, as well as intensifying attacks on the railway, as the main reasons for suspending Eurobond debt servicing – the total number of such attacks in 2025 (1,195) exceeded the combined total for 2023-2024.
In 2025, Ukrzaliznytsia's revenue fell 1.2% to UAH 104.8 bln, EBITDA declined 17.2% to UAH 10.1 bln, and its net loss grew from UAH 2.7 bln to UAH 7.6 bln.
The company's liquidity also deteriorated significantly: the current liquidity ratio fell from 1.56 to 0.54, the quick liquidity ratio from 0.91 to 0.27, while the debt-to-EBITDA ratio rose from 7.54 to 11.80 and the debt coverage ratio fell from 0.18 to 0.11.
