May 1, 2019 / 8:11 AM / 3 months ago

Swiss Railways plans to put more Bombardier trains into service

ZURICH (Reuters) - Swiss Federal Railways (SBB) and Bombardier are making progress on resolving technical problems with passenger trains the Swiss have ordered and could put five more of them into service within weeks, the partners said.

The Bombardier FV-Dosto double-deck train "Ville de Geneve" of Swiss railway operator SBB is seen at the central station in Zurich, Switzerland April 29, 2019. REUTERS/Arnd Wiegmann

SBB said in February that new Bombardier FV-Dosto trains had yet to live up to expectations and that the companies were working to correct issues, including improving software and fixing problematic doors.

“The new long-distance double-decker trains are more stable than at the end of 2018 thanks to various improvements. If developments remain positive, the SBB will add more Bombardier trains to operations over the next few weeks,” they said in a joint statement on Wednesday.

SBB awarded Bombardier a 59-train contract in 2010, worth 1.9 billion Swiss franc ($1.86 billion), but the first deliveries were made only in 2018. Amid problems, Bombardier agreed to add three more trains free of charge as compensation.

Toni Haene, SBB’s head of passenger transport, said on Wednesday that the plan was to put five more trains into service in addition to the 12 that have already been delivered.

The Swiss contract for the trains calls for undisclosed penalty payments in the event of delays, but the SBB has not given any details so far.

Financial terms were still under discussion, Haene told Reuters on the sidelines of a news conference held aboard one of the new trains as it traveled between Zurich and Basel, but declined to give more details.

Stephane Wettstein, the head of Bombardier’s Swiss business, said the partners were learning more every day about how the trains perform.

He noted that trains designed to travel between cities at 160-200 km/hour (100-124 miles/hour) were not as smooth at lower speeds on regional routes, but plans to improve this were on track.

“We are not yet at the finish line but the train is getting better every day,” he told reporters.

Bombardier investors are closely watching the Swiss order, one of a handful of rail contracts affected by delivery delays that generated disappointing free cash flow last year and a subsequent selloff of Bombardier shares and bonds.

Bombardier Inc last week cut its full-year profit and revenue forecasts as it wrestled with production challenges in its key railcar-making unit, rattling markets ahead of the company’s annual general meeting this week.

The transport division is crucial to a five-year plan to turn around Bombardier, after heavy investment in plane production drove the company to the brink of bankruptcy in 2015.

The rail unit is expected to generate $10 billion, or half of the company’s revenue, in 2020.

SBB said in January that it would not take new intercity trains from Bombardier until the Canadian company fixed problems with the 12 already in service, raising questions over the timing of future deliveries under the contract.

SBB said in February it had paid about a third of the contract value to Bombardier so far.

Reporting by Michael Shields; Editing by Susan Fenton

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