MIRABEL, QUE. — Bombardier Inc.’s CEO says he’s “not pleased” with the escalating delivery delays of Toronto’s new streetcars and he’ll do “whatever is required” to turn the contract around.
The $1.2-billion order for 204 streetcars, placed by the Toronto Transit Commission (TTC) in 2009, has turned out to be a serial disappointment for the city. Bombardier has repeatedly reduced the number of streetcars it expects to deliver this year, promising 75 in 2015, reducing that to 54 in January, then further lowering its estimate to 30 this month.
“The situation on the train side in Toronto is a disappointing one for us. I am not pleased with where we are,” CEO Alain Bellemare told reporters Friday after the company’s annual shareholder meeting in Mirabel, Que.
Earlier this month, the company appointed Benoît Brossoit as the new president of its transportation unit’s Americas division, saying former president Raymond Bachant was leaving “to pursue other career opportunities.”
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Brossoit was formerly senior vice-president of operations at United Technologies Corp., and Bellemare said he’s already taking charge of the situation.
“He has met with the decision-makers in Toronto and we are going to complete our full analysis and we will come back to them with a recovery plan to make sure that we deliver on our commitments moving forward,” Bellemare said.
Bombardier has blamed the delays on quality issues with parts made at a plant in Mexico. When asked whether the company would consider moving production of those parts to Canada, Bellemare said it was too soon to say.
“The only thing I will tell you is we will do whatever is required to make sure that we deliver what we have committed to deliver to Toronto,” he said.
TTC chairman Josh Colle said Wednesday that it would be a “slap in the face” for Toronto if the federal government decides to give Bombardier financial aid unless it can “straighten out the Toronto order” first.
Bombardier has asked the federal government to invest US$1 billion it its CSeries jetliner program, matching a contribution the Quebec government promised last year.
The company announced its biggest CSeries order yet Thursday, signing a deal to sell Delta Air Lines Inc. 75 aircraft with options for 50 more. Bellemare said the order, while essential to the CSeries’ future, does not change the company’s request for federal funding.
At the company’s annual shareholder meeting, Bellemare thanked the Quebec government for its support, saying the investment reinforces customer trust and “allows us to reach our full potential.”
“Now imagine what we could accomplish with an investment from the federal government!” he said.
The annual meeting was more contentious than most, with shareholder rights group Médac putting forward a proposal that would require Bombardier to disclose voting results by share class. This would give an indication of how many minority shareholders support a resolution, as opposed to the current system of pooling the minority votes with the family-controlled multi-voting Class A shares.
“We will do whatever is required to make sure that we deliver what we have committed to deliver to Toronto”
Médac’s proposal was backed by major institutional investors, including the Canada Pension Plan Investment Board and the Ontario Teachers’ Pension Plan, but was opposed by the company.
The pension funds also opposed proposed changes to Bombardier’s stock option and deferred share unit plans.
Médac’s proposal was defeated, with 87.77 per cent of shareholders voting against it, while the stock option and deferred share unit plans both passed with more than 90 per cent of the vote.
Bombardier’s executive chairman Pierre Beaudoin said the family has no intention of giving up its control of the company.
“The multiple voting-right shares enable us to invest in the long term and allow us to protect the company against its dismantling,” Beaudoin told shareholders. “We do not want to change anything.”