(Adds analyst, lawyer, investor comments, closing share price)
By Euan Rocha and John Tilak
TORONTO, Jan 28 (Reuters) - Shares of Bombardier Inc , which closed below C$1 for the first time since 1991 on Wednesday, fell 10 percent further on Thursday as some funds dumped shares on fears that the train and plane maker may be ejected from Canada's main index.
The stock closed 10 percent lower at 89 Canadian cents a share on the Toronto Stock Exchange, with investors rattled by the possibility of Bombardier getting pushed off the Toronto Stock Exchange's S&P/TSX composite index.
"Five years ago people would have waited until an index came out with its additions and deletions. Now almost every firm has a group responsible for indexes, and they pre-position prior to the exchange making changes to their constituents' list," said John Goldsmith, deputy head of equities at Montrusco Bolton.
To be a component of the composite index, a stock must have a volume-weighted average price of C$1 over the three months prior to the quarterly review. The next quarterly review is due at the end of February, and will cover the period from December through February.
One strategist at an asset manager that operates some index-linked funds, who spoke on condition of anonymity, said his firm does not exit entire positions on the day a stock is cut from an index, but instead moves to trim positions in ways that are most appropriate for its investors.
The slide in Bombardier's shares reflects the company's continuing struggle to find customers for its new line of CSeries passenger jets. Bombardier is preparing the jet to enter service in the next few months, after years of delays and snowballing costs.
The lack of any new CSeries sales has driven the stock down 34 percent since the start of 2016. The stock is now the only S&P TSX 60 component to be trading below the symbolic C$1 mark and one of only three below that mark on the composite.
The sell-off may be a little premature though warn some, as Bombardier, like previous fallen corporate giant Nortel, could do a share consolidation in order to regain compliance with index rules.
Such a move though is likely to require a shareholder vote and approval by a two-thirds majority of both the Class A and Class B shareholders in the company, say lawyers.
Despite the effort involved, one aerospace analyst who spoke on condition of anonymity said a stock consolidation would make sense for Bombardier. (Additional reporting by Allison Lampert; Editing by Meredith Mazzilli and David Gregorio)