May 1, 2019 / 8:08 AM / 3 months ago

Swiss Railways plans to put more Bombardier trains into service

ZURICH, May 1 (Reuters) - Swiss Federal Railways (SBB) and Bombardier are making progress on resolving technical problems with passenger trains the Swiss have ordered and could put more of them into service within weeks, the partners said.

SBB said in February that new Bombardier FV-Dosto trains had yet to live up to expectations and that the companies were working to correct issues, including improving software and fixing problematic doors.

“The new long-distance double-decker trains are more stable than at the end of 2018 thanks to various improvements. If developments remain positive, the SBB will add more Bombardier trains to operations over the next few weeks,” they said in a joint statement on Wednesday.

SBB awarded Bombardier a 59-train contract in 2010, worth 1.9 billion Swiss franc ($1.86 billion), but the first deliveries were made only in 2018. Amid problems, Bombardier agreed to add three trains free of charge as compensation, boosting deliveries to 62.

The Swiss railway had said it would not take new double-decker intercity trains from Bombardier until the Canadian company fixes problems with the 12 that are already in service, raising questions over the timing of future deliveries under the contract.

Bombardier investors are closely watching the Swiss order, one of a handful of rail contracts affected by delivery delays that generated disappointing free cash flow last year and a subsequent selloff of Bombardier shares and bonds.

Bombardier Inc last week cut its full-year profit and revenue forecasts as it wrestled with production challenges in its key railcar-making unit, rattling markets ahead of the company’s annual general meeting this week.

The transport division is crucial to a five-year plan to turn around Bombardier, after heavy investment in plane production drove the company to the brink of bankruptcy in 2015.

The rail unit is expected to generate $10 billion, or half of the company’s revenue, in 2020.

SBB said in February it had paid about a third of the contract value to Bombardier so far.

The Swiss contract for the trains calls for undisclosed penalty payments in the event of delays, but the SBB has not given any details so far.

$1 = 1.0197 Swiss francs Reporting by Michael Shields; Editing by Susan Fenton

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