MONTREAL — Bombardier Inc., the world’s largest maker of rail equipment, said yesterday it should reap a record £3-billion pounds ($6.9-billion) or more in supply and maintenance contracts over 30 years from the consortium set to take over two thirds of London’s underground rail system, a wire service reports.
Bombardier said contracts should start flowing later this year, once a privatization deal is finalized between London Underground Ltd. and the private sector consortium of which Bombardier is part.
Bombardier’s railcars are already in use in subways around the world such as New York, Paris, Kuala Lumpur or Guangzhou, but the London contracts would be the largest in the company’s history, a spokeswoman said.
London Transport gave the deal the go-ahead yesterday, promising it would pave the way for long-term funding of the “Tube”, the world’s oldest underground railway system.
It said it hoped work to modernize the aging and congested network could start this summer, after winning clearance from competition authorities, private sector financing and approval from the British government’s Health and Safety Executive.
“It’s a massive windfall for Bombardier,” said Dundee Securities analyst Richard Stoneman.
Marko Pencak, analyst with Credit Suisse First Boston, was more muted in his enthusiasm.
“It’s a big number, but it’s over 30 years,” he said, adding Bombardier needs about $8 billion worth of new business just to replace the orders they deliver on the transportation side.