Adios SkyTrain? Bombardier is selling off its rail division.

What would happen if the region continues to plan for SkyTrain, yet there is no SkyTrain?

If a potential buyer for Bombardier’s rail division already has on the market it’s own proprietary railway or railways, they would probably discontinue SkyTrain which has not had a sale in over a decade and with one SkyTrain line due to be decommissioned and replaced with either LRT or a heavy rail metro and another mired in legal problems, prospects for potential sales is minimal.

This could also be the reason for TransLink to repurchase the old MK.2 fabrication plant, in hopes of custom building SkyTrain for future light-metro lines.

All I can say is “I told you so” and let the SkyTrain lobby cry in their beer.


By:Ai??Bloomberg,Ai??Published on Fri Apr 10 2015

Bombardier Inc. may fetch as much as $5.4 billion if it decides to sell the rail unit that supplies Torontoai??i??s new LRTs and long-delayed streetcars. Its rail unit has played a ai???stabilizing roleai??? amid the struggles at the companyai??i??s aerospace business, according to Alta Corp Capital Inc.

Bombardier is discussing options with bankers about its rail business that could include a full or partial sale of the business or an initial public offering, Reuters reported, citing people familiar with the matter whom it didnai??i??t identify. The shares rose 5.8 per cent at 10:01 a.m. to $2.76 (Cdn.). They have fallen 34 per cent in the past year through Thursday.

The transportation unit is worth as much as $3.50 a share, giving negative value to the aerospace businesses, said Chris Murray, an analyst with AltaCorp Capital, in a telephone interview.

ai???They are a global player in rail,ai??? Murray said. ai???It would attract a fair amount of interest.ai???

RBC Capital Markets analyst Walter Spracklin puts the potential value of Bombardierai??i??s Transportation much lower, at about $1.45 a share, or $3.47 billion.

He bases this on the estimate for 2016 earnings of 10 cents a share from the transportation side, as well as assuming 50 per cent of interest and taxes are applied equally to aerospace and transportation divisions.

ai???If a more significant portion of the debt is ladenai??? onto Bombardier Aerospace, then the value of Bombardier Transportation ai???could reach the quoted $5 billion, but we do not view that as prudent nor realistic,ai??? Spracklin wrote in a note to investors.

Isabelle Rondeau, a Bombardier spokeswoman, declined to comment to Bloomberg News on the report and said the company wouldnai??i??t speculate on rumours. She reiterated statements from Bombardier executives who said in February that the company would consider various options and that ai???everything is on the table.ai???

A breakup could be the best way for Montreal-based Bombardier to overcome the struggles facing its aerospace business, analysts and investors have said. The rail unit, which includes subway cars, signaling and control equipment, is the healthier part of the company, with 2014 earnings before interest and taxes of $429 million compared with a loss of $995 million at the aerospace unit.

ai???The transportation group plays a stabilizing role on the earnings profile of the company,ai??? Murray said.

Alain Bellemare, who became chief executive officer in February, is shaking up Bombardierai??i??s leadership team. He announced the replacement of two senior executives Thursday just after new doubts emerged about one of the largest orders for the CSeries.

Repeated delays have pushed the CSeriesai??i?? commercial debut to 2016, after an initial target of 2013, and ballooned the development cost of Bombardierai??i??s largest-ever plane to $5.4 billion, at least $2 billion over budget.

A sale of the rail unit would raise questions about how the aerospace businesses would fare on their own, Murray said.

ai???Short term, itai??i??s maybe a great thing for investors,ai??? he said. ai???The issue is longer term and what that says about their intention of future project development.ai???

Comments

5 Responses to “Adios SkyTrain? Bombardier is selling off its rail division.”
  1. eric chris says:

    Yup, sales for s-train and its obsolete 386 floppy drive computer control system are slipping. If the nitwits at TransLink take over the “revamping” of decrepit s-train cars, disaster is imminent.

    Besides the loss of life which will surely occur if the monkeys at TransLink take over the engineering to rebuild s-train cars, costs will soar until people are killed and we finally put the nail in TransLink. I said in the past and I’ll say it again, scrap the obsolete and power wasting s-trains and go with modern and efficient trams.

    TransLink (BC Transit before TransLink) went awry building massively expensive s-train and subway lines to try to compete with travel by car. It was a flop as it has been everywhere else in Canada and the world. Only coercive measures such as parking restrictions in downtown Vancouver and UBC have forced some drivers to take transit.

    http://www.vancourier.com/opinion/opinion-vote-yes-in-transit-plebiscite-if-you-want-highrise-congestion-1.1819291

    Transit demand (y) is dependent upon the housings density (x). Housing density is the independent variable, and transit demand is the dependent variable. Mathematically, y = c(x); where, c is some constant depending upon factors such as parking restrictions forcing some drivers to take transit. It is the City of Vancouver which determines the housing density and in turn the demand for transit.

    Unfortunately, the number of drivers (z) is four times y. That is, z = 4(y). Whenever the housing density (x) is increased, the number of drivers increases (z) much more than the number of transit users (y). Therefore, when housing density is increased on transit corridors, transit can’t possibly reduce the number of cars. Increased transit service to accommodate increased housing density always leads to increased road congestion. For TransLink to suggest otherwise is tantamount to fraud.

    There is disconnect in Vancouver with the City of Vancouver deciding the housing density and the TransLink bureaucracy deciding the level of transit service. To correct this requires ridding Vancouver of TransLink for new and competent transportation staff at the City of Vancouver to select the right amount and type of transit (trams or LRT) for the planned housing density controlled by the City of Vancouver.

  2. Haveacow says:

    I took this from the twitter feed of Darly’s website, darlyvsworld its a confirmation of what I earlier heard from a friend of mine a few weeks ago but he told me to sit on it until the news broke that Bombardier may sell or begin spinning off several divisions big and small into bond or share offering independent divisions owned by Bombardier. This friend who still works for Bombardier’s rail division in corporate sales, said that yes, Skytrain production will continue until 2018-2019, after that no promises. Several Chinese rail vehicle producers have been making visits to Kuala Lumpur regarding the Klang Valley Rail Line. The government did confirm that it will be a driverless linear induction system but the vehicle provider MAY not WILL change.

    Reply
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    10 Apr
    Daryl Dela Cruz @daka_x

    Malaysia confirms #SkyTrain technology for 36km Klang Valley line, trains might not be supplied by Bombardier http://wp.me/p3cbG0-b5U

    Malaysia confirms SkyTrain technology for 36km Klang Valley line

    A problem for Bombardier is that, Alstom has also began offering a driverless light and full scale Metro system in 2013 called Axonis. I have mentioned it before. This system is quite brilliant in that, it can use almost any type of drive system and railway truck. Meaning if you want to use another company’s drive system, you can swap out Alstom’s standard electric can motor drive and put in your own system or replace the whole truck with someone else’s truck technology for example, a linear induction and bending equipped truck supplied by someone else. This way you are never stuck with one company’s technology and the is this a piece of proprietary equipment argument ends forever. It can also use rubber tired drive systems as well. This train can also street run because it can use both wired and third rail power systems, without the builder changing the interior location of all its power system and support equipment. Its Automatic Train Control system is not centralized it is in the vehicle itself and is combined with the signaling system which saves money big time, on both operating costs and equipment purchases (80% less equipment needed than Bombardier centrally controlled CITYFLO 650 system). You do not have to use Astom’s driverless system and the trains can be adapted to operate under almost anyone’s driverless system. The other great innovation is that its builder has also developed a simplified “Lego or Mecano type modular prefabricated above grade right of way system that they claim, can reduce building time and costs significantly inside crowed cities. Ankara Turkey is considering this system because it is designed to handle a capacity’s between 10000-45000 pphpd. The claims are great but if they can actually pull it off for this market, especially in Asia, it’s a game changer. Many of the subsystems and features mentioned here are already available on the standard Metropolis Metro system offered by Alstom.

    So it seems the Light Metro market is becoming a little more crowded. I see Vancouver maybe buying quite a few
    Alstom components in the future, say sometime past 2019? I agree its quite unlikely given that in the near future a
    stock and or bond driven Bombardier owned rail car provider will continue to offer the Skytrain technology as a independent product, with so few existing sales. However, like Alstom they may get more involved into the, “we also offer separate key components” market for someone else’s trains. Bombardier already does this to smaller extent but it brings in a lot less money than building rail cars for people. Well, I guess if the market is extremely crowded in places like Asia, you do what you can to make money. This does not stop them from building more of their highly successful Light Rail Vehicles and Metro/Subway car products and adding to those with new technology.

    Zwei replies: The Kula Lumpor ART system was a political error (article in the Strait Times) as politicians wanted a monorail and pamphlets at the time described ART as a monorail )by coincidence the third R/T line built in Kuala Lumpor was indeed a monorail.

    Transit authorities now invest equally in ART (Kelana Jaya Line) and conventional LRT light-metro (Ampang Line), so as the Ampang Line received money for extensions, the Kelana Jaya Line will follow.

  3. eric chris says:

    More spending on hub to hub transit by TransLink will simply concentrate transit users and do nothing to reduce the number of drivers on the roads: proven over and over again in Vancouver, Miami, Boston, Montreal… Toronto. Even The Vancouver Sun is finally starting to acknowledge this:

    “Since the sales tax was first introduced, it has delivered billions in revenue to the MBTA [Massachusetts Bay Transportation Authority]… The push to expand the MBTA at all costs left it unable to maintain its system to a high standard and saw it having to issue debt to pay for its maintenance and modernization programs. The more than $2.2 billion in debt that the agency has incurred to pay for routine maintenance has failed to keep its trains and buses in good working order.

    The sales tax proposal was supposed to give the agency a firm, reliable source of revenue that would ultimately see it produce an operating surplus. But since that time, the MBTA’s deficits have only increased and it has failed to maintain its system to a high standard. Transit customers have literally been left out in the cold… Meanwhile, congestion in Boston is nearly as bad as it ever was. Commuters currently spend 53 hours a year stuck in traffic jams — up from 33 in 1990.

    One critic called the sales tax a classic bait and switch, pointing out that much of the sales tax money has been used to fund existing operations… Congestion in the city is no better.”

    http://www.vancouversun.com/news/Opinion+Transit+ease+congestion/10953067/story.html

    Drivers who do not have to take transit are not going to spend $50,000 or whatever on a car to leave it at home and trudge out of their way to the bus stop, to then transfer to the crowded, diseased and smelly s-train crawling with creeps, molesters, misfits and cretins, to possibly mingle with rapists and murderers, as well. Nope.

    “Today, I was travelling from Vancouver to the SFU Surrey campus. This incident began at the Waterfront station.”

    https://translinkharassment.wordpress.com/2015/03/09/dont-stand-so-close-to-me/

    “Vancouver Transit Police seek witness to duck-calling sex offender incident.”

    http://metronews.ca/news/vancouver/1035523/vancouver-transit-police-seek-witness-to-duck-calling-sex-offender-incident/

    Bunglers behind this idiotic hub to hub transit system (s-train and subway) got it terribly wrong. They’ll never admit this in order to protect their jobs which are 100% overhead costing taxpayers about $120 million annually in administrative costs. Instead, they keep trying to scam us for more money to pay for their gravy train jobs under the pretense that it is to reduce road congestion.

    Okay, if transit is used to reduce road congestion, what’s the reason for transit after 7 pm on weekdays as well as on weekends and holidays? How does late night transit with few to no passengers at 3:30 am reduce road congestion and not increase transit costs as well as not increase air pollution? Transit by TransLink is fundamentally a social welfare program degrading the environment and increasing taxes. We can’t fund transit properly until this is accepted and we stop pretending that transit is going to somehow solve road congestion when it hasn’t in the past and won’t in the future.

    No, no, no: we do not need an additional 400 buses and 1,200 union bus drivers (proposed by TransLink) to mainly deal with the purported “pass-ups” along Broadway in Vancouver. These buses are being used to prop up the subway and s-train lines which crash and burn without the added 400 buses to transfer riders to current, planned and pending subway and s-train lines. They have nothing to do with pass-ups.

    If the “pass-ups” extending the wait for a bus by three minutes from three minutes to an excruciating six minutes (occasionally during peak hours) along Broadway in Vancouver are so awful, what do you call the regular 15 minute to 60 minute waits for a bus in the rest of Metro Vancouver? Aren’t the 60 minute waits for the missed bus in Delta the priority rather than the three minute waits for the missed bus along Broadway in Vancouver having far too much transit service anyhow with the concurrent express and regular service (practically empty most of the time) until 2:30 am as well as the almost entirely empty late-night service until 3:30 am?

    Where is Rambo when you need him? Adios, TransLink dirt bags:

    https://www.youtube.com/watch?v=kgozRTq8M_U

  4. Haveacow says:

    Its interesting that you mention the MBTA, it was one of the Regional Transit Authority Structures I studied for my undergrad thesis. The big problem started for them when they were created in 1964 without the planned primary tax that was going to fund them, a $50 a year payroll tax paid against all employers and employees in eastern Mass. There other big problem was that a local tax on all property sales was not passed in Boston but oddly enough it was passed in the suburban ring around Boston. This forced the MBTA into an almost constant deficit situation from the beginning in the mid 60′s not the 90′s, they have never had enough money!

    Toronto’s system works just fine! Its the 2.5 million cars entering the city from the outside regions that cause the real problem. More than 2/3 of the daily traffic in the city originated in York, Durham, Peel, Halton, Niagara, and Waterloo regions as well as Dufferin, Simcoe, Victoria, Peterborough and Wellington Counties, last but not least The new City of Hamilton. Most of these other areas don’t have region wide transit and those that do are just catching up now after doing nothing for litterally3 decades. Then GO transit is forced to act as the bridge between these smaller systems and the TTC and its bursting at the seams. All these transit agencies also hate having to pay for their part of their GO Transit service as well as their own crappy service. Yet the TTC is supposed to do most of the heavy lifting for all these people but only the City of Toronto tax payers pay for it. Its not a failure of a transit network design, its a core municipality being forced to operate without enough funding and passenger carrying capacity for decades. Its only now that transit capital spending has reaching the levels of the 1950′s, 60′s and early 70′s in the greater Golden Horseshoe. Unfortunately the area’s population has grown by 6-7 million people since then to 8.7+ Million living in Toronto’s Commuter shed. That’s not counting the 6 area expressways that were never built.

    The Crosstown Expressway
    The Scarborough Expressway
    The Extension of Hwy. 400 to the Gardner
    The completion of the Allen Expressway (Spadina Expressway)
    The East Metro Freeway
    The widening of the entire Gardner and Queen Elizabeth Way from 6-12 lanes East Downtown Toronto to Fort Erie.
    Keep in mind this was combined with all the rapid transit spending as well. It would have made Toronto a very different place however, I don’t think it would have really improved the traffic much. Unless they built the planned 16 22 story downtown parking structures that encircled downtown Toronto, that were also planned. All these expressways would have destroyed many fantastic neighborhoods that still exist today and eliminated 350,000 tax payers.

  5. STeve Samson says:

    The horse is to the car what the car is to maglev pods for commuting. Already successful motor results. Next testing for software in Nov 2015.

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