January 21, 2020 / 4:43 PM / a month ago

NYC Transit expects return of Bombardier subway cars to service this week

MONTREAL (Reuters) - New York City Transit expects subway cars recently built by Bombardier Inc (BBDb.TO) to return to service this week, after an estimated 300 cars were yanked earlier in the month due to safety concerns, agency President Andy Byford said on Tuesday.

FILE PHOTO: A worker walks in front of a Bombardier advertising board at the SBB CFF Swiss railway train station in Bern, Switzerland, October 24, 2019. REUTERS/Denis Balibouse

“The good news is, subject to confirmation, we are expecting a return to service this week of the R179 trains,” Byford told a committee meeting of the Metropolitan Transportation Authority (MTA), which includes New York City Transit.

Bombardier is facing pressure in its transportation division, the Canadian company’s largest unit by revenues, over a handful of problematic rail contracts, primarily in Europe.

The plane and train maker shed nearly a third of its value last week after warning its 2019 profits would be lower because of contract problems in the rail division, which incurred a $350 charge.

Bombardier stock closed up 5.74% on the Toronto Stock Exchange on Tuesday following a Bloomberg report that the company held preliminary talks with France’s Alstom (ALSO.PA) to potentially combine their rail businesses.

Earlier in January, New York City Transit, North America’s largest public transportation agency, directed the subway cars to be temporarily removed from service to address a “suspected systemic issue involving the door mechanism.”

It was the latest concern for the agency, a longstanding Bombardier customer, over the long-delayed R179 car order, which was initially expected to be completed in 2017 for around $600 million.

Byford said inspections and adjustments of all door systems and software upgrades “are now all complete for the entire R179 fleet. That’s 298 cars.”

Bombardier said in a statement that it “stands by the quality and integrity of its door design and its components, and wants to reassure customers and passengers that this particular issue does not involve any design or mechanical defects.”

Engineering consultant LTK, acting as a third party, signed off on the inspections, Byford said, which included an additional 20 subway cars that have not yet been put into service.

“Bombardier and their independent safety adviser have issued formal written statements assessing the actions taken to date and giving their assurance that the fleet is safe to return to service,” he said.

New York City Transit and LTK were reviewing the information provided by Bombardier in support of those assessments, he said.

“Once - and only once - all parties concur, we expect the fleet to return to service,” he added.

Reporting by Allison Lampert; Editing by Chizu Nomiyama, Rosalba O'Brien and Jonathan Oatis

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