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Aerospace concerns weigh on Bombardier

Nov. 19, 2009, Montreal – Aerospace challenges pressured stock in Bombardier Thursday, a day after its ground transportation division scored a coup by being chosen preferred bidder in a French rail project.


November 19, 2009
By Administrator

Nov. 19, 2009, Montreal – Aerospace challenges pressured stock in Bombardier Thursday, a day after its ground transportation division scored a coup by being chosen preferred bidder in a French rail project.

Shares of the Montreal-based manufacturer dipped 14 cents at $4.84 in morning trading on the Toronto Stock Exchange.

That followed a nearly six per cent increase Wednesday after France's national railway confirmed it was in exclusive talks with Bombardier on a deal that could be worth up to $12.6 billion.

While the contract would be a major win for Bombardier, analyst Cameron Doerksen of Versant Partners said he remains concerned over the challenging business jet market and the expectation that aerospace margins will be depressed through next year.

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David Newman of National Bank Financial said he expects both regional and business jet production could be cut. But he said the transportation division's growing orders could support the company's earnings until aerospace recovers.

The initial phase of French deal would see Bombardier supply the Societe Nationale des Chemins de fer francais (SNCF) with 80 trains valued at $1.6 billion. The contract could increase to 860 trains valued at $12.6 billion if all options are exercised.

Talks on reaching a firm deal will continue until next February. Deliveries would begin in 2013. The contract is a major coup for Bombardier as it beat out rival Alstom. It follows a $4 billion contract in September to build high-speed trains in China.

Bombardier Transportation is also awaiting word on several other tenders around the world, including cars for the Montreal subway and Toronto's light rail system.