VANCOUVER, British Columbia — According to a wire service, shares of Bombardier Inc., the world’s No. 1 maker of rail passenger equipment, dropped on Tuesday to their lowest level since late 1998 as Amtrak shut down high-speed trains, co-built by the Canadian company, because of a mechanical problem.
The U.S. rail service said it was forced to suspend operation of many of its the Acela Express trains running between Washington and Boston after a routine inspection found cracks in brackets that act as lateral shock absorbers on one the train’s electric locomotives.
Bombardier’s Class B shares on the Toronto Stock Exchange closed down 96 Canadian cents per share at C$9.04 per share on Tuesday, a 52-week low but above the C$8.56 they had dropped to earlier in the day.
The Montreal-headquartered company’s previous 52-week low was C$9.19 per share for the Class B shares, and the stock was already lagging amid concern over the impact on its airplane production operations of the troubles in the airline industry. It is the world’s third-largest civil aircraft maker.
Bombardier and Amtrak were already in public relations battle over mechanical problems with the trains built in a partnership with France’s Alstom SA (Paris:ALSO.PA – News) , and one analyst said investors were overreacting.
“Mechanical problems with equipment are normal. When they happen, you fix them,” said Richard Stoneman, an analyst for Dundee Securities, attributing the stock’s drop to the market’s “bizarre frenzy” for bad news.
Stoneman said was Alstom that actually built the locomotives, and said the source of the problem may eventually be found to be the condition of Amtrak’s rail bed rather than the equipment itself.
The Acela Express service began with much fanfare in late 2000, but that was more than a year behind schedule because of a variety of problems during the construction of the initial six-car, two-locomotive train sets.
Amtrak was initially planning to buy 20 Acela train sets, for $700 million, but has received only 18 and there doubt that it will accept the final two.
Since the Acela introduction it has become popular with riders, but problems ranging from brakes that lock and toilet doors that do not open have made Acela the most unreliable in Amtrak’s busy Northeast Corridor service area.
Bombardier says the problems have been the result of many design changes ordered by Amtrak. It said on Tuesday that a team of mechanics had been dispatched to check the trains it was “sparing no effort” to solve the most recent problem
“In my experience when you introduce new equipment with a new design, you often have problems,” Stoneman said.
Stoneman also doubted the brackets would be expensive to replace. Each locomotive has four brackets, and Amtrak said some of the trains it inspected after the initial discovery did not have cracks.
Alstom, which saw its shares fall just over 4 percent on Tuesday, played down the impact of the train problems, and said it would have no material impact on its results.