Two sources familiar with the talks said Bombardier Inc had moved into pole position for a New Jersey Transit rail car contract that could cover as many as 999 multilevel passenger cars, including options.
The Canadian plane-and-train maker’s lead is a lift for its North American rail business, which has been under pressure from delivery delays and lost orders. One source said the size of the deal could make it one of the biggest rail contracts in years if NJ Transit exercises most of the options.
Chinese state rail company CRRC Corp was also in the running, but the sources said NJ Transit ruled out its bid. It was not immediately clear why. CRRC and NJ Transit did not respond right away to requests for comment.
Bombardier Transportation spokesman Eric Prud’Homme declined to discuss what he described as an “ongoing procurement.” He confirmed the volume at 999 multilevel cars, but said the “agency has not awarded the contract yet.”
Reuters had reported in April that Bombardier was competing for the order, which at the time was expected to start with 113 cars and expand through additional options as NJ Transit tried to modernize an aging fleet. NJ Transit is the largest statewide public transportation system in the United States, carrying more than 900,000 riders a day.
The agency has also faced criticism over delays and breakdowns. An audit published in October said its operations were “inefficient” and “unsustainable.”
According to the sources, Bombardier later became the preferred bidder and may have benefited from its earlier work on rail cars for New Jersey. One source said the contract could be finalized as early as December, though such decisions can still slip.
The New Jersey process comes as Bombardier faces investor scrutiny over its Berlin-based transportation unit after the company tied a weaker-than-expected free cash flow forecast to working capital needs in that division. The disclosure triggered a sell-off in its shares and bonds.
Bombardier shares were roughly flat in Toronto trading on Tuesday after jumping on Monday, when analysts said a separate regulatory probe into the company’s executive share sales plan appeared routine.
The Montreal-based company has also said higher cash use was partly linked to customers delaying acceptance of rail cars, since train makers are paid on delivery. Citi Research analyst Manish Somaiya said in a Monday note that the change in cash was partly due to “customer delays in achieving delivery milestones.”
Bombardier has previously run into delivery problems with Metrolinx, the provincial agency that oversees public transport in Greater Toronto. In 2016, the company launched a turnaround plan for its rail operations in the Americas.
Earlier in 2018, Kawasaki of Japan won a New York metro car contract worth up to $3.7 billion, including options. Bombardier was removed from that competition after delays on a prior order.
Reporting by Allison Lampert in Montreal and Brenda Goh in Shanghai; editing by Denny Thomas and Grant McCool.
