But the chief executive's handling of a train drivers' strike has tarnished his reputation and a last-minute political hurdle dashed his dream of an initial public offering next year.

Mehdorn's blunt style helped Deutsche Bahn out of the red after he took over a company in 1999 struggling to cope with the merger of former West German and East German railways.

His drive into the profit zone -- Deutsche Bahn expects operating profits of 2.4 billion euros ($3.6 billion) in 2007 -- also earned the man with the high-pitched voice many enemies.

"I'm goal-oriented," Mehdorn once told Reuters. "Zig-zagging is not my style."

Mehdorn slashed staff levels to 230,000 from 310,000 with surprisingly little protest thanks to union cooperation -- no small feat in Germany. He also won praise for retooling the railways as a service-oriented enterprise with motivated staff.

Everything was rolling his way in July when Chancellor Angela Merkel's cabinet approved plans for a flotation of a 25 percent stake of Deutsche Bahn the government valued at 3 billion euros ($4.44 billion).

Mehdorn, who is married to a French woman and spends his holidays in France, was scheduled to retire by his 65th birthday in July before his contract was extended by three years to oversee the IPO, which he expected to complete in 2008.

"All the naysayers have now gone quiet," he said at the time, a claim that was rather premature.

CONQUERING GLADIATOR

Things quickly started to unravel after that.

The railway's three unions, which had for years fallen into line with what Mehdorn wanted, demanded big pay rises.

Mehdorn managed to limit the rise agreed with the two main unions Transnet and GDBA to 4.5 percent but the GDL train drivers union, until then a little-known grouping with 34,000 members, refused to accept that level.

Its members compared themselves to airplane pilots, and demanded 31 percent more pay and a separate labour contract.

Their periodic strikes of up to 62 hours have paralysed the country of 82 million yet the GDL union enjoys wide public backing, in part due to Mehdorn's abrasive style.

"I don't need a diplomatic pass," is one of his favourite lines.

Mehdorn wanted to crush the union ahead of the privatisation to impress investors, analysts said. That plan backfired.

"He thought the public would turn against the union over the strikes and then, as a conquering gladiator, he would be free take the railways on to the bourse," said Wolfgang Schroeder, political scientist at the University of Kassel.

"But the public has largely stuck with the strikers, something you rarely see in German disputes."

Adolf Rosenstock, economist at Gebser & Partner Asset Management, said the IPO was all but killed off after the Social Democrats, partners in Merkel's grand coalition, insisted it be open to small investors.

Mehdorn rejects that idea because he fears insufficient capital would be raised for his expansion plans.

"Mehdorn's privatisation is still twitching but it's only a question of time before it is pronounced dead," said Rosenstock. The SPD veto was not related to the strikes yet the messy dispute created unwanted turbulence.

"Its failure has damaged his reputation. Some might admire him for the hard line but his public comments really hurt his cause. He came across as brash and arrogant."

See also:

Deutsche Bahn faces new strike threats by Transnet, GDL considers deal

Thomson: 22 Nov, 2007

LONDON -- German Railway operator Deutsche Bahn is facing new strike threats from railway union Transnet which has demanded the inclusion of all trade unions in pay talks, according to a report in German newspaper Die Welt.

The walkout threat comes after the train drivers' trade union GDL announced it is considering a wage agreement with the railway operator which could end in a deal without the union staging a strike.

In a letter to Deutsche Bahn's chief executive Hartmut Mehdorn, Transnet's head Norbert Hansen said the trade union will not accept its pay demands to be 'held back' while the demands of other working groups are addressed, the newspaper reported.

'If it became necessary to regain respect and attention, we could also call workers to strike,' the letter seen by the Welt warned.

Transnet has so far called for talks featuring all the trade unions representing Deutsche Bahn employees to negotiate a new reward system across the company.

In a statement published on its website, Transnet has reiterated the need for a united front among all the trade unions operating within Deutsche Bahn, but it has also suggested a right to veto for the GDL in matters regarding train drivers.

It also called for a suspension of labour disputes until February.