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Railway Boss Announces Serious Cost-Cutting, Layoffs (adds)

Ljubljana, 24 December (STA) - The boss of state-owned railway operator Slovenske zeleznice has announced far-reaching cost-cutting measures to turn the troubled company around, including the temporary layoff of nearly a tenth of the workforce.

In the absence of measures the railways would post a loss in excess of EUR 82m, but with lower material and labour costs it will save EUR 32.4m, chief executive Goran Brankovic told Thursday's Finance.

"You have to realise that Slovenske zeleznice would be bankrupt in the absence of the special [rail company] law, so we have to act quickly in order to turn things around," he said.

Most notably, the company plans to temporarily lay off 1,056 workers next year, mostly those nearing retirement, the disabled and workers that are not necessarily needed any more.

Additionally, to secure liquidity the company is seeking a EUR 200m bond issue guaranteed by the state.

If these measures succeed, the company could emerge from the red in 2011, according to Brankovic.

Transport Minister Patrick Vlacic revealed after today's cabinet session that a restructuring plan had already been agreed with all stakeholders. The details of the blueprint will be revealed next week.

Slovenske zeleznice made a net loss of EUR 32.6 in the first ten months of 2009, while its operating loss amounted to EUR 31.2m.

The most troubled division is cargo transport, where a 30% year-on-year drop in revenues pushed the loss to EUR 31.9m.

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