Montreal-based Bombardier Inc. has moved into pole position for a major New Jersey Transit rail car contract, according to two sources familiar with the talks. The development would give the Canadian manufacturer a lift in North America after a period marked by delivery delays and lost business to competitors.
The sources said the deal covers as many as 999 multilevel passenger cars, including options, and could become one of the largest rail contracts awarded in years if most of those options are taken up. Chinese state rail company CRRC Corp was also competing for the work, but NJT had ruled out the Chinese bid, the sources said. It was not immediately clear why.
Bombardier Transportation spokesman Eric Prud’Homme declined by email to comment on what he described as an “ongoing procurement.” He confirmed the contract volume as 999 multilevel cars, but said the “agency has not awarded the contract yet.” CRRC and NJT did not immediately respond to requests for comment.
Reuters reported in April that Bombardier was in the running for the NJT order, which at the time was expected to cover 113 multilevel passenger cars, with hundreds more available as options, as the agency sought to modernize its aging fleet. NJT is the largest statewide public transportation system in the United States and carries more than 900,000 riders a day. It has also faced criticism from commuters and public officials over delays and breakdowns. An audit published in October said its operations were “inefficient” and “unsustainable.”
One source said Bombardier had an edge because of its earlier rail car work for New Jersey. Both sources spoke on condition of anonymity because the discussions were private. One of them said the order could be finalized as early as December, although such decisions can still slip.
The New Jersey development comes as Bombardier’s transportation business remains under scrutiny. Investors have been watching the Berlin-based unit after the company linked a disappointing free cash flow forecast to working capital needs there, triggering a selloff in its shares and bonds. Bombardier shares were roughly flat in Toronto trading on Tuesday, after rising on Monday when analysts said a separate regulatory probe into the company’s executive share sales plan was routine.
Bombardier also said some of its rail cash receipts had shifted into 2019 from 2018 because of delayed deliveries on several contracts, including one in Switzerland. Prud’Homme said in an email: “The cash receipt is not lost, it’s just moved in time, mainly into 2019.” The company has also dealt with late deliveries before at Metrolinx, the provincial agency that runs public transportation in Greater Toronto.
In 2016, Bombardier 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, while Bombardier was removed from that competition after delays on a previous order.
The article was published on 2018-11-21T01:15:14.000Z.
