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Russian firm cuts order for Swiss trains needed for 2018 World Cup
May 26, 2016 / 2:17 PM / 2 years ago

Russian firm cuts order for Swiss trains needed for 2018 World Cup

* Russian firm cuts order by more than half

* Weak rouble led to pressure to renegotiate deal

* World Cup expected to strain Russia’s transport networks

By John Miller

ZURICH, May 26 (Reuters) - A Russian rail company has cut its order for Swiss trains that will help ferry visitors to the 2018 World Cup by more than half because of pressure from Western sanctions, low oil prices and the weak rouble, Swiss firm Stadler Rail said on Thursday.

Russian rail company Aeroexpress agreed in 2013 to buy 25 double-decker commuter trains from Stadler for 385 million euros ($432 million) but has now reduced the order to 11 trains worth 183.9 million euros, Aeroexpress said.

Stadler said that, since signing the original contract, the fall in oil and gas prices and Western sanctions on Russia over the Ukraine crisis had weakened the rouble. That caused problems for Aeroexpress, which financed the deal via Russia’s Gazprombank.

To salvage part of the deal -- privately held Stadler said the transaction remains its biggest-ever in Russia -- Chief Executive Peter Spuhler agreed to reduce the number of trains and extend Aeroexpress’s repayment period.

“Obviously, the geopolitical situation didn’t exactly support the transaction,” Spuhler told a news conference in Moscow.

Stadler said the trains would be ready for the World Cup.

The new railcars will connect Domodedovo Airport and Vnukovo International Airport to Moscow’s city centre.

Russian expects up to a million visitors will come for the World Cup, straining the country’s airports and transport infrastructure.

Russia won the right to host the tournament in 2010 with a bid promising to overhaul the transport system and build state-of-the-art sport facilities. Costly airport renovations and high-speed rail links were seen as necessary to ease travel between the 11 host cities. But economic weakness has forced the government to reduce planned spending on the World Cup.

Switzerland did not sign up to Western sanctions on Moscow that limited international financing for major Russian banks and energy companies.

Stadler has found alternative homes for some of the other trains in the original order: five will go to Azerbaijan, while four are destined for rail lines in Georgia.

Stadler said it was still optimistic that four trains without buyers - after the original order was early on reduced to 24 - will eventually be sent to Aeroexpress for “operation during the FIFA World Cup in Moscow to avoid bottlenecks”.

When Aeroexpress ordered the trains three years ago, it said the double-decker train sets were needed because passenger traffic was rising nearly 20 percent annually and it wanted to modernise its fleet. ($1 = 0.8921 euros) (Additional reporting by Gleb Stolyarov and Jason Bush in Moscow; editing by Adrian Croft)

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