Half a century after shifting its focus from snowmobiles to manufacturing railroad and transit equipment, Bombardier has announced it is selling its rail and transit operations to Alstom SA for a reported $8.2 billion with plans to make business aviation its sole focus. The move is by far the largest in a series of recent divestitures by Bombardier aimed at tackling a mountain of longterm debt, estimated at more than $9 billion.
The announcement that the French company Alstom will acquire Bombardier Transportation comes one year after Alstom’s plans to merge with German conglomerate Siemens were blocked by European Union regulators as being “a threat to competition” in the marketplace. One stated goal of that merger was to better position the two European companies to take on competitors such as China’s CCRC. In its own comments on the pending transaction, Alstom asserts that the addition of Bombardier’s assets and network will bring it a long way toward reaching that goal.
Once the deal is completed, Alstom said it will move its North American headquarters from New York City to Montreal and establish a state-of-the-art research and development center there.
During the past two years, Bombardier has been conducting a virtual fire sale, selling its share of the C Series jet (now A220) to Airbus SE, its turboprop business, its regional jet program to Japan’s Mitsubishi Heavy Industries and its aerostructures business to Spirit AeroSystems. Canada’s biggest manufacturer, Bombardier had more than 73,000 employees in 2014. After it is downsized to solely the producer Learjet, Challenger and Global Express business jets, the company roster is expected to drop to about 18,000.
Quebec mechanic Joseph-Armand Bombardier invented the snowmobile in 1935 and founded the company bearing his name in 1942 to produce and sell them, launching the popular Skidoo line in 1959. The company left that industry in 2003. His son was at the helm when the company ventured into subway and railcar manufacturing in 1970, subsequently purchasing Montreal Locomotive Works in 1975.
Though Bombardier grew to become a major player in the transit field, it faced increasing competition from builders including Alstom, Siemens, Stadler and CCRC in the past decade. A contract to supply 299 New York City subway cars was plagued with design issues and delays, and in January the entire fleet of new cars was pulled from service due to a problem with their doors. Those problems will become Alstom’s headache when the deal is finalized.
Founded in 1928, Alstom entered the electric locomotive business in 1932. It has been recognized as a world leader in rail technology since introducing the TVG in 1978, setting and breaking various world rail speed records beginning with a 240-mph run in 1981 and setting the current record of 357.2 mph in 2007. Alstom operates 11 U.S. facilities and estimates it has produced approximately 25 percent of the transit vehicles currently operating here.
–Eric Berger, Railfan & Railroad Magazine