Toronto could hand Bombardier a "signature" contract

Wed Jul 2, 2008 5:31pm EDT
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By Leah Schnurr

TORONTO (Reuters) - Bombardier Inc appears poised to win a major contract to replace Toronto's fleet of streetcars, highlighting the growing global demand for the plane and train maker's light rail vehicles.

The contract, worth C$1.25 billion ($1.7 billion) for 204 new streetcars, is expected to go to the Montreal-based company after Germany's Siemens AG decided not to enter the bid.

Given growing concerns over pollution and congestion in major cities around the world, the light rail segment is likely to have long-term growth potential for Bombardier. It is already the world's No.1 provider of light rail equipment with customers in Europe and North America.

"It's green, it's politically correct," said Jacques Kavafian, analyst Research Capital, of the transit division, "It's got the whole environmental thing written on it, so I think it's going to be important."

The potential contract has an option for purchasing up to an additional 364 streetcars over the next 15 years, as part of a plan to expand the use of light rail and rapid transit across Toronto.

A spokesman for the TTC was unable to give a total value of the contract should the option be exercised, but a report in the Globe and Mail newspaper put the value at more than C$3 billion.

David Slack, a spokesman for Bombardier's transportation division, said the deal could stand as a "signature" contract for the company as Toronto is an important city for mass transit in North America.

"In terms of positioning ourselves as the leader of light rail vehicles in the world, it's very important in that regard," said Slack.   Continued...