LDN - Business

Bombardier executive says canceling rail deal would cause 'irreparable harm'

[March 18, 2017] By Allison Lampert

MONTREAL (Reuters) - Bombardier Inc would suffer "irreparable harm" to its global reputation if it loses a light train contract from a Toronto transportation agency, a senior company official said in recent court filings.

The Canadian plane and train maker, which is fighting to save the C$770 million ($573 million) contract with Toronto's Metrolinx, will seek an injunction on March 21 to prevent an order for 182 cars from being canceled over customer complaints of delivery delays and poor execution.

Bombardier Transportation's top executive for the Americas, Benoit Brossoit, weighed in for the first time in an affidavit, filed with the court on March 3, highlighting the significance of the Metrolinx contract to Bombardier's prospects.

A company improvement plan will allow Bombardier to meet a revised 2018 delivery date, and ending that contract would likely affect the company's ability to "successfully bid on future projects," Brossoit said.

In a statement issued on March 2, Metrolinx, the provincial agency in charge of transportation in and around Toronto, questioned Bombardier's current ability to deliver the cars on time.

Bombardier Transportation spokeswoman Cecile Vion-Lanctuit said in an email, "We have, like any companies, some challenges with a few contracts. We are closely managing them to overcome the difficulties and bring them back on track."

The court hearing comes at time when Bombardier is undertaking a broader five-year turnaround plan to boost profits, reduce delays and improve production.

In Australia, deliveries from a 2013, A$4.4 billion ($3.38 billion) Bombardier-led consortium contract to build 75 six-car trains were halted last month, according to the Queensland state government, citing issues such as braking problems and the design of the driver cabs, which it said have inadequate visibility.

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A Bombardier logo is pictured on the company booth during the European Business Aviation Convention & Exhibition (EBACE) at Cointrin airport in Geneva, Switzerland, May 24, 2016. REUTERS/Denis Balibouse

A spokeswoman for Bombardier in Australia said the company could not comment because of its contractual arrangements.

With a $30 billion backlog, Bombardier Transportation is viewed as a reliable revenue generator, compared with aerospace, which triggered a severe cash crunch in 2015 while developing two new jets, prompting the company to consider bankruptcy.

But Berlin-headquartered Bombardier Transportation continues to face challenges from Metrolinx and other contracts signed before the 2015 arrival of Chief Executive Alain Bellemare, who launched the five-year plan to boost rail revenues from $8 billion in 2016 to $10 billion in 2020.

Metrolinx, which has clashed repeatedly with Bombardier since signing the 2010 contract, has questioned the reliability of the contract's first pilot vehicle, which was supposed to be delivered in 2015 but was only produced more recently by Bombardier.

(Reporting by Allison Lampert in Montreal; Additional reporting by Jonathan Barrett in Sydney; Editing by Denny Thomas and Leslie Adler)

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