Bombardier’s European division inks US$543M in rail contracts
Combined, the deals include almost 200 trains and development of a transit system in China
MONTREAL—While Bombardier failed to land any new orders at the Paris Air Show, its railway division has secured about US$543 million worth of contracts alone or in partnership in China and London.
Bombardier Transportation, headquartered in Berlin, was selected as the preferred bidder in a 260-million-pound (US$412.9-million) contract to provide at least 45 more London overground trains. The railway cars, almost 200 of them, will be built at its facility in Derby with deliveries beginning in 2018.
Bombardier says the contract is expected to be finalized by month’s end. It includes maintenance and options for more trains.
The company won an original deal to provide 57 trains starting in 2007 for a suburban rail network in Britain that serves Greater London and Hertfordshire with 111 stations on several routes.
In China, Bombardier’s joint venture with CSR Nanjing Puzhen Co. Ltd. in November signed its first contract—a US$130-million deal from Shanghai Shentong Metro Co. to provide an automated people-mover system.
Bombardier will gain US$14 million for design and other work done on the project in Pittsburgh. It will also share in the 50/50 partnership that will see the 44 rail cars assembled in China.
The new 6.6-kilometre, elevated system with six stations will extend the Shanghai Metro Line 8 to the large residential district of Pujiangzhen. It is expected to open in December 2017.
In Paris, Bombardier’s new CSeries jetliner gained some buzz but no new orders while rivals Embraer, ATR, Boeing and Airbus signed many deals. Brazil’s Embraer sold 103 planes valued at US$3.3 billion while ATR received commitments for 81 turbos valued at US$1.5 billion.
Analysts said Bombardier’s lack of new orders was disappointing, with the only activity coming from WestJet (TSX:WJA) exercising options for six Q400s and CSeries launch customer Swiss International Airlines switching 10 of its 30 firm orders to larger CS300 aircraft.
Benoit Poirier of Desjardins Capital Markets said Bombardier made a positive impression with the new aerospace executive team, the display of two CSeries aircraft and results from the plane’s flight tests that were better than promised.
“However, we believe it is still disappointing given the significant orders announced by ATR and Embraer, which represent missed opportunities for Bombardier,” he wrote in a report.
Meanwhile, Poirier said Bombardier will likely not decide to stretch the CSeries to a CS500 model that competes more directly with Boeing and Airbus until the CS300 enters into service late next year. Commercial aerospace president Fred Cromer said there is longer term potential to develop a larger plane but the company needs to first see market demand.