Russian Railways, which also manages Armenia’s rail network through South Caucasus Railway, is facing a deep financial crisis and is struggling to service its debts. The company, which operates one of the world’s largest rail networks—spanning some 85,000 kilometers, crossing 11 time zones, and transporting millions of passengers annually—is now on the brink of bankruptcy.
According to Reuters, as of 2025 the company’s debts have reached a record 4 trillion rubles—more than $50 billion—amid worsening economic problems in a country at war.
The situation has deteriorated to the point that the board of directors has cut this year’s budget expenditures by 20 percent, requested financial assistance from the government, and decided to put up for sale one of the company’s flagship assets: a 62-story luxury skyscraper in central Moscow valued at around $2 billion. Reuters sources also note that, in order to cover its debts, the company may be forced to raise freight and passenger transportation tariffs.
According to official data, the rapid decline of Russia’s largest private-sector employer— with around 700,000 employees—began after the launch of the war against Ukraine, when Moscow prioritized the transportation of military cargo to supply troops and equipment on the front lines.
Another key reason behind the company’s growing debt is the decline in transportation volumes, largely following Western sanctions. In recent years, Russian timber exports have fallen by 18 percent, metals by 8 percent, and ore and coal exports by 5 percent.
Since 2008, Russian Railways has also taken over the management of Armenia’s railways for a 30-year period. Over the past two decades, there have been only a few years in which South Caucasus Railway operated at a profit and did not receive millions of drams in subsidies from Armenia’s state budget to offset losses.
In 2024, the Russian company’s Armenian subsidiary recorded declines across several indicators. According to the company’s report, South Caucasus Railway’s revenue in 2024 fell by more than 3.3 billion drams—nearly 20 percent—compared to the previous year. Revenues declined from freight transportation, passenger services, and concession asset improvements alike.
Over a four-year period, taxes paid by South Caucasus Railway to Armenia’s budget dropped by more than half—by 55 percent. While the company paid 5.8 billion drams in taxes in 2021, tax payments in 2024 amounted to just over 2 billion drams. The company’s main clients have included fuel importer CPS, mining company GeoProMining Gold, and freight operator Apaven.
The 2024 report also shows that revenue from passenger transportation totaled 1.027 billion drams, while expenses reached 4.5 billion drams. As a result, the company incurred losses of around 3.5 billion drams in this segment alone in 2024—losses that were later partially compensated by the Armenian government in the form of subsidies.
Against the backdrop of these systemic problems, Armenia’s Prime Minister Nikol Pashinyan stated last month that he had asked Russian partners to urgently restore the railway from Yeraskh to Nakhijevan and from the Akhurik section to the Turkish border. He also stated that if it becomes clear that the Russian side faces difficulties in restoring those sections, the Armenian government could take them back and renovate them using its own resources.
