Losses of Ukrzaliznytsia in autumn 2025: 7.2 billion hryvnias

Autumn 2025 signaled new alarming trends for Ukrzaliznytsia (UZ) regarding the financial stability of the state carrier: net losses for the first 9 months exceeded 7.2 billion UAH. This figure was officially announced by the Deputy Chairman of the Supervisory Board, Serhiy Leshchenko, from the rostrum of the Verkhovna Rada on November 5. The carrier’s unprofitability quickly became a top topic for society, industry, and the state, and debates about the future of Ukraine’s railway sector again turned into questions of national security and economic resilience.

Main reasons for the financial collapse:

1. Structural rift between freight and passenger transport
   Between 2021 and 2025, UZ lost almost half (49%) of its freight volumes due to the war, infrastructure destruction, the halting of the coal industry in Donetsk region, mining and enrichment plants, and overall reduction of industrial production. The company’s income base critically depends on the freight segment, which historically subsidized passenger transport.
2. Chronic unprofitability of the passenger segment
   In 2025, passenger transport losses reached historic highs of 18–20.8 billion UAH. Ticket prices remain politically sensitive and do not reflect true costs. Cross-subsidization severely depleted the company’s reserves.
3. War and infrastructure destruction
   In 2024–2025, more than 800 attacks targeted Ukraine’s rail infrastructure, damaging over 3,000 assets: bridges, stations, depots, and tracks. These losses led not only to extra costs but also to logistical bottlenecks, missed delivery deadlines, and increased operational expenses.
4. Decrease in export volumes and structural economic shifts
   In the first half of 2025, export volumes dropped by 13.5% (to 38.7 million tons), and domestic shipments by 11.7%. Imports slightly increased but did not offset the decline.
5. Ineffective tariff policy
   Tariffs remained unchanged for years, with indexation lagging behind inflation and rising costs. The proposal to raise freight rates by 41.5% (in two steps in 2026) emerged as a forced response to the catastrophic situation: only through price hikes can UZ expect additional revenues totaling 22.5 billion UAH.

Socio-economic effects
Over the past two years, UZ tried to balance the need to support the defense sector and to maintain key logistics flows for business and the public. Mobility during wartime is a question of social cohesion and survival. Reduced fares and increased spending on evacuation, defense, and discount categories were justified, but resulted in record deficits.

Role of state support, 2025–2026
In 2025, to compensate for passenger losses, the government allocated an extra 13 billion UAH in subsidies. The draft 2026 state budget includes 4.2 billion UAH for urban transport, 1.2 billion for railway modernization, 1.8 billion for rail supply, and 16 billion for direct UZ compensation.

Challenges and prospects for 2026–2028
Main forecast: passenger losses will keep growing (20.8 billion UAH in 2025, 22.3 in 2026, 24.7 in 2027, 29.4 in 2028); profit from freight drops as long as industry stagnates under military threats. Without systemic reforms and a new tariff model, deeper losses and erosion of the company’s capitalization loom ahead.

Recovery strategy:

1. Rate policy review:
   UZ prepared a phased plan for raising freight rates (by 27.5% from January 1 and by 11% from July 1, 2026) to get over 22.5 billion UAH in extra income.
2. Cost optimization:
   Active sales of non-core assets, scrap, and property lease could add up to 10 billion UAH.
3. Digitalization and shadow losses reduction:
   Stricter procurement controls and “e-railway” solutions will fight theft and corruption.
4. Segmentation of passenger and freight businesses:
   A shift in subsidizing loss-making segments is needed, with targeted compensation for specific citizen categories.
5. Reviving international cooperation and investments:
   Attracting loans, grants, and donor funds from the EU and international development banks.

Conclusion
UZ’s losses mirror long-standing structural challenges: war, an unprofitable passenger segment, postponed rate reform, and reluctance to update rolling stock. The 7.2 billion UAH net loss over 9 months of 2025 is a symptom of a systemic crisis. Without decisive reforms and state support, the company risks losing its backbone role for Ukraine’s economy and vital infrastructure. At the same time, the crisis is an impetus for faster change, external financing, new approaches to pricing, and transparent national investment strategies.

Author: Ihor Yasko, Managing Partner at WINNER Law Firm, PhD in Law.
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