- Canadian regulators certify company's flagship jetliner
- Train contract for Belgium is shared with France's Alstom
Bombardier Inc., battered by delays on its flagship jetliner, got a double dose of good news with regulators’ approval of the C Series model and the winning of a $3.6 billion rail-car contract with Alstom SA.
Friday’s developments helped propel the widely traded Class B shares -- Canada’s worst-performing industrial stock this year -- to their biggest jump in three months and added a shot of optimism for the company’s train and aerospace businesses.
Chief Executive Officer Alain Bellemare said he sees good progress in talks with the Canadian government on Bombardier’s request for additional financing, after winning a $1 billion investment from Quebec for the C Series program. He declined to comment on the timing of any federal decision.
“Any help from the federal government would reassure potential customers who may have been concerned about Bombardier’s financial capability, and may help to unlock some aircraft orders,” Benoit Poirier, a Desjardins Capital Markets analyst, said Friday in a note to clients.
Canadian Transport Minister Marc Garneau announced the certification of the C Series at a press event outside Montreal, moving the jet closer to Bombardier’s latest target for initial deliveries to start in the second quarter. The plane is running more than two years late and has seen its development costs balloon by $2 billion to $5.4 billion.
The U.S. Federal Aviation Administration is working with Transport Canada regarding FAA approval, the U.S. agency said by e-mail. European and U.S. regulators typically certify aircraft shortly after they are cleared by the country where they were designed and built.
The rail contract with Alstom is for 3.3 billion euros to supply double-decker cars to the Belgian national railway through 2021. The first 445 wagons are slated for delivery starting in 2018, the trainmakers said in a joint statement. Montreal-based Bombardier’s share of the contract is valued at 2.1 billion euros, with the rest going to Alstom, they said.
Bombardier jumped 18 percent to C$1.38 at the close in Toronto, the stock’s biggest single-day climb since Sept 10. Through Thursday, the shares had dropped 72 percent this year.
In November, Bombardier decided to sell a 30 percent stake in its train unit rather than hold an initial public offering for the business. The company will use cash from that deal to fund development of the C Series.
Bombardier and Alstom already cooperate on trains for the Paris region’s commuter network and Montreal’s subway system.