Today, when the issue of renewable green energy sources is increasingly important, a high-quality and modern railway powered by renewable energy sources represents a great added value to any economy. The railways in Croatia are lagging modern trends in European union and because of that railways have gained a negative perception among the public. In this paper were made a financial analysis of the largest railway company in the Republic of Croatia HŽ Putnički prijevoz d.o.o. and analysis of the profitability in railway transport of selected companies in the European union. The main goal of the paper is to determine which components affect the profitability of railway companies. Profitability components were determined using econometric analysis. A static model with fixed effects was used in the analysis to determine the impact of six factors on the profitability of railway companies in 10 countries of the European union in the period from 2010 to 2019. The results of the analysis showed the presence of economies of scale in passenger traffic, while this phenomenon cannot be confirmed in the transport of goods. It was also shown that the number of employees is positively correlated with the net profit margin unlike to the common assumption about low productivity of workers in the public sector. Results of the financial analysis of the company HŽ Putnički prijevoz d.o.o. show that the company is below the recommended liquidity limit, while profitability is low, but in line with the railway sector in the European union.