Following the publication by Bombardier Inc. of its quarterly results, Alstom released a statement in which it said the quarterly results pointed to ‘unexpected and negative developments regarding Bombardier Transportation’.
This statement follows the news that the European Commission has given the go-ahead for Alstom to acquire Bombardier Transportation, following a series of commitments put forward by Alstom to the EC.
Alstom went on to say that it was still convinced of the ‘strong strategic rationale for the acquisition of Bombardier Transportation’. It also said it was ‘confident in its ability to restore in the medium term the profitability and commercial performance of the business’.
Alstom formally announced its intention to acquire Bombardier Transportation in February 2020. The financial information available to Alstom at the time was more favourable. Alstom described Bombardier Transportation as ‘facing challenges’.
Alstom will take these operating and financial developments into account as it proceeds with its talks with Bombardier Inc.
Following the European Commission’s conditional approval on 31 July, Bombardier Transportation and Alstom are working to obtain the necessary approvals and complete the Works Councils consultations.
In its financial report, Bombardier said that revenues for the quarter of 1.5 billion USD were a reflection of the reduced level of production activity at key sites in Europe and the Americas, as well as to revised estimates on several late-stage projects, largely in the UK and Germany.
Bombardier said its adjusted EBIT loss for the second quarter of 383 million USD was ‘significantly below expectations’. The loss, it said, reflected an additional charge of 435 million USD at Transportation, primarily due to incremental engineering, certification and retrofit costs associated with several late-stage projects. The reported EBIT loss for the quarter was 377 million USD. Bombardier has set up a dedicated team to look in depth into ‘challenging’ legacy projects, assessing project management processes and talent resources. The team is to get a full picture of the causes of excessive costs so that corrective action can be taken.
Despite these figures, Bombardier said its outlook for transportation remained ‘positive’. It has a 33.7 billion USD backlog and an order intake of 1.6 billion USD in the quarter, with contracts from several different countries. A big contract was an option triggered by SNCF, another was the Delhi-Meerut regional rapid transit system in India.
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