Bombardier Gets Public Rebuke From Top Investor for Rail DelaysBy
Caisse CEO says Toronto streetcar shortcomings ‘can’t happen’
Trainmaker also missed out on bidding for New York subway deal
Bombardier Inc. got a scolding from a major shareholder that recently spurned its trains for those of a competitor.
The delays plaguing Bombardier’s efforts to supply a Toronto streetcar system are unacceptable, said Michael Sabia, chief executive officer of Caisse de Depot et Placement du Quebec. The pension-fund manager, which owns a stake in Bombardier’s rail division, chose Alstom SA this month to supply a C$6.3 billion ($5 billion) light-rail system that the Caisse is developing in Montreal.
“What matters here, the core of the challenge, is improving execution,” Sabia told reporters Wednesday. “You’ve seen what the absence of precision execution can mean, and here I’m thinking about issues that have been encountered in Toronto. That can’t happen.”
The public rebuke spotlighted the stumbles of Bombardier’s largest division, which was blocked last year from bidding for a $3.2 billion New York subway-car contract because of past delays. Chief Executive Officer Alain Bellemare is trying to pull off a turnaround at the maker of trains and planes, after two aircraft-development programs left the company with $9.2 billion in debt.
Bombardier rose less than 1 percent to C$3.93 at 2:31 p.m. in Toronto. The shares advanced 29 percent this year through Tuesday, the second-biggest gain on Canada’s benchmark TSX Composite Index, as Bellemare made progress in boosting cash flow.
The Montreal-based Caisse, with C$298.5 billion under management, is Bombardier’s biggest outside investor, with a stake of about 2.5 percent in the Class B shares, according to data compiled by Bloomberg. Canada’s No. 2 pension-fund manager also owns 28.5 percent of Bombardier Transportation, as the rail unit is called, having invested $1.5 billion in the operation.
Bombardier, also based in Montreal, “is making a lot of progress on addressing those issues, and we’re obviously very pleased about that as an investor in the business,” Sabia said.