What prompted the decision to consider a merger?

In 2001, construction began on a new steep ramp to Engelberg. During the construction of the tunnel, the two railways held intensive discussions about the future development of public transport between Lucerne, Engelberg, Brünig, and Interlaken. Both railways had a lot of catching up to do in terms of renewing their rolling stock and infrastructure.

Why was the decision ultimately made to enter into merger talks?

For technical, economic, and financial reasons. Both railways had the same track gauge and the same rack-and-pinion and power systems. Two administrations, two infrastructure departments, and two control centers were managed for a network route of around 100 km. The renewal of the two railways' vehicle fleets also played an important role.

How did the process go?

There was considerable pressure from the federal government and the cantons. A rational and financially viable operating concept was required. A steering committee was formed with the task of clarifying the possibilities for close cooperation, including a complete merger. The committee included representatives from SBB, the Federal Office of Transport, the LSE board of directors, and the managing directors of both railways. It was soon agreed that a complete merger to form a new, independent railway company was the best solution.

What was your role in this process?

I was Chairman of the Board of Directors of the LSE and was elected Chairman of the Steering Committee. I was responsible for chairing the meetings and, with the support of my colleagues, conducting negotiations with the political authorities and offices of the federal government, cantons, and municipalities.

How did you find the negotiations?

Very intense, open and efficient. Of course, initially there were very different ideas and opinions. But I sensed a strong desire among all those involved to develop a forward-looking and financially viable project that would also be accepted by the relevant authorities and agencies.

What were the biggest challenges during implementation?

It was quickly agreed that a new public limited company would have to be founded. However, the size of the ownership shares was controversial. The LSE, with a route length of around 25 km, was a public limited company owned by the federal government, the cantons of Obwalden and Nidwalden, the municipality of Engelberg, and a few private shareholders. The Brünig Railway, with a route length of around 75 km, was an independent division of SBB AG. Further heated discussions arose when it came to determining the location of the company headquarters, the workshops, and the control center.

How were the differences overcome?

A good solution was found by bringing in financial experts. SBB became the main shareholder with 66%, while the remaining 34% remained in the hands of the former owners of LSE. Zentralbahn became an independent subsidiary of SBB. For business reasons, Stansstad was chosen as the location for the company headquarters and control center. For operational reasons, the maintenance workshops remained at their previous locations in Meiringen and Stansstad.

These decisions certainly caused some unrest among the staff.

Yes. The merger in the area of human resources was a particular challenge. Two different corporate cultures had to be merged into one entity. As a result of the merger, some of the staff had to change their tasks and place of work. This did not meet with enthusiasm everywhere. In order to address the concerns of the staff, several orientation meetings were held and discussions were held with those affected.

How was the “new railway” received by the population?

Initially, it was met with considerable skepticism. Even the name was not well received by everyone. In addition, the new railway unfortunately had to contend with frequent vehicle malfunctions and delays in the initial phase, which provoked some strong reactions from passengers. People were quick to point out that things had been running smoothly before. However, thanks to considerable effort, the problems were resolved within a short period of time.

As if that weren't enough, six months after it was founded, the Zentralbahn was hit by a violent storm.

This was the first real test for the young company. The impact was enormous. Almost the entire route suffered extensive damage. Only the Lucerne–Stans section remained passable. The damage amounted to around CHF 40 million. Repairing the infrastructure as quickly as possible was a huge challenge. Our people did a great job. It didn't matter whether they were former Brünig employees or LSE employees. Everyone pitched in where it was needed.

What lessons did you learn from the merger?

Such a significant project must be prepared very seriously and there must be agreement among those responsible. Authorities and government agencies must be informed in good time, and factual and well-founded public relations work must be carried out. A tight schedule is required for implementation. Delays and a lack of information create uncertainty and there is a risk that the project will fail. Everything has to happen in quick succession!

Looking back, would you do anything differently?

Of course, with hindsight, you would do this or that differently. I am thinking in particular of involving staff at an earlier stage and more targeted public relations work. However, looking back, I believe that the fundamental decisions made regarding the merger were the right ones, as Zentralbahn has developed into a successful transport company and a jewel in the crown of Switzerland's meter-gauge railways.

Paper edition of the magazine “hin und weg” – also available as a subscription.

This is an article from the magazine “hin und weg”. You can find the printed version at the train stations in Engelberg, Sarnen, Stans and Meiringen, in all Travel Centres, as well as on trains. We will also be happy to send the magazine to your home address. Send an e-mail to hello@zentralbahn.ch with the subject “Subscribe to hin und weg magazine” and include your postal address in the body text of the message.