Bombardier's Shares Fall After Twin Jolts of Bad News
By Jacquie McNish
Bombardier Inc.'s share price fell Wednesday after partnership talks with Siemens fell apart and the U.S. announced a harsh tariff Tuesday night.
Shares of Montreal-based Bombardier dropped nearly 14% when trading opened Wednesday on the Toronto Stock Exchange as the company grappled with multiple issues in its train and aircraft divisions. The stock recovered somewhat by midday to C$2.09, down about 8%.
A U.S. ruling to impose heavy tariffs on Bombardier's new CSeries passenger jets could further hurt sales that have been stalled since December. The U.S. International Trade Commission is adding a tariff that would triple the cost of CSeries jets sold in the U.S., after a complaint from Boeing Co that Bombardier was improperly underpricing the jets.
Another problem for the Canadian company is its core train division, which generates most of its profits but faces a sharply diminished global position as it struggles with production problems.
New York's transit authority did not include Bombardier in bidding during the summer for a subway car contract after past problems with delivery delays. Toronto's transit body is suing the company over similar issues
"We have done everything short of building the vehicles ourselves," said Andy Byford, CEO of the Toronto Transit Commission, which is suing Bombardier for late streetcar deliveries. The city has received only 43 of 148 new streetcars Bombardier was contracted to deliver this year. He said the new streetcars were stalled by multiple production problems, equipment flaws and turnover of a dozen senior Bombardier project managers in six years.
"That screams to me that the project is in trouble," Mr. Byford said.
A spokesman for Bombardier said that although it "faces challenges," its train division has improved performance under new leadership and expects to deliver a total of 204 trains to Toronto by a 2019 deadline.