December 11, 2018 / 10:03 PM / 2 years ago

UPDATE 1-NJ Transit to decide on Bombardier order worth up to $3.6 bln

(Adds comment from Southeastern Pennsylvania Transportation Authority)

By Allison Lampert and Hilary Russ

MONTREAL/NEW YORK Dec 11 (Reuters) - New Jersey Transit’s board will decide on Wednesday whether to award the first part of an order for up to 999 cars worth as much as $3.6 billion to Canada-based Bombardier Inc, a copy of the agency’s Dec. 12 agenda shows.

The board will vote on the purchase of 113 multilevel passenger vehicles, including passenger amenities and parts, for $669 million.

The deal also includes options for up to 636 vehicles for New Jersey and an additional 250 cars for the Southeastern Pennsylvania Transportation Authority (SEPTA) worth a total of $3.6 billion if fully exercised, according to an executive director’s report attached to the agenda.

The contract would be one of the largest orders for Bombardier’s North American rail business in years, if all options are exercised.

The agenda confirmed a Reuters report in November that Bombardier was the preferred bidder for the contract.

It was not clear when or how many of the options would be exercised. SEPTA spokesman Andrew Busch said by email that the fleet replacement for the agency’s Silverliner IV cars was “included in our 12-year capital program, estimated for some time between 2024 to 2030,” and was contingent on funding.

NJT, the largest statewide public transportation system in the United States, with over 900,000 daily riders, has been criticized by commuters and public officials for delays and breakdowns. An audit published in October concluded that its operations were “inefficient” and “unsustainable.”

The Multilevel III Vehicles will feature new customer amenities such as USB ports, an infotainment system, LED lighting, power restroom doors and a video surveillance system, the agenda report said.

Chinese state rail company CRRC Corp was also vying for the contract.

NJT had ruled out the competing bid from the Chinese company, although it was not immediately clear why.

The New Jersey order would be a boost for Bombardier, which in 2016 launched a turnaround plan for its rail operations in the Americas, following complaints by customers of delivery delays and manufacturing concerns.

Bombardier Transportation, the company’s largest unit by revenues, with a $34 billion backlog, aims to lower costs and boost margins by expanding its more lucrative signaling and services business.

Bombardier spokeswoman Maryanne Roberts called the NJT agenda items “an encouraging development and we look forward to the board’s decision tomorrow.”

A New Jersey Transit spokesman referred Reuters to the board agenda.

Bombardier stock rose 3.81 percent on Tuesday after being up more than 5 percent in earlier trading.

Reporting by Allison Lampert in Montreal and Hilary Russ in New York; Editing by Grant McCool and Peter Cooney

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