Bombardier Shares Fall In Wake of Twin Blows -- WSJ
By Jacquie McNish
This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (September 28, 2017).
Bombardier Inc. was licking its wounds on Wednesday, a day after two rivals said they would merge their train operations and the U.S. announced a tariff on its passenger jets.
Shares of the prominent Canadian manufacturer plummeted when trading opened on the Toronto Stock Exchange Wednesday, and finished the day down 7.8% at 2.12 Canadian dollars ($1.71).
Sales of Bombardier's new CSeries passenger jets have stalled out this year, and the decision by the U.S. International Trade Commission certainly won't help. The body is imposing a tariff that would triple the cost of CSeries jets sold in the U.S., acting on a complaint from Boeing Co. that Bombardier was improperly underpricing the aircraft.
Another problem for the Montreal-based company is its train division, which generates most of its profits but faces a sharply diminished global position as it struggles with production problems.
Bombardier initiated partnership talks with Siemens AG earlier this year, according to people familiar with the talks, in a bid to revitalize its train business in the face of growing competition, notably from China. After those talks stalled in August, Germany's Siemens turned to France's Alstom, announcing on Tuesday a merger of their train operations that will have combined revenue of $18 billion.
With sales of only $7.6 billion, Bombardier will be "at a competitive disadvantage" against much bigger global players, said Desjardins Capital Markets analyst Benoit Poirier.
China's CRRC Corp. ranks as the world's largest train maker with more than $30 billion of sales.