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Bombardier wins Florida fast-rail bid

(The following article by Nicolas Van Praet was posted on the Montreal Gazette website on October 28.)

MONTREAL -- Bombardier Inc. was picked yesterday to build a high-speed railway in Florida using its new JetTrain. But even rail advocates admit the project has little chance of seeing the light of day.

The Florida transportation authority chose the Montreal plane and train maker along with partner Fluor Corp, the U.S.'s largest publicly-traded construction company, to manufacture a fast-train railway from Tampa to Orlando.

Bombardier and Fluor were picked as preferred bidders, which means a final contract still has to be negotiated. Bombardier's bid was about $2.1 billion, below that of rival Global Rail Consortium, a partnership of 29 European, Korean and American companies.

The Florida contract marks the first time Bombardier's new JetTrain was selected for a high-speed project. In that sense, it is a step forward for the train program, developed at a cost of $26 million in a partnership with the Federal Railroad Administration. JetTrain uses a jet engine and runs on existing tracks.

"It's a significant decision," said Lecia Stewart, vice-president of high-speed rail North America for Bombardier. "We're on the edge of an emerging market."

But even as Bombardier representatives rejoiced, railway advocates and officials from the office of Florida Governor Jeb Bush warned the project will never get off the ground. Public funding for the bulk of the plan has not yet been committed.

"It's a very nice announcement, the potential is wonderful, but I wouldn't be rushing out to buy Bombardier stock," said Bruce Richardson, an official with the United Rail Passenger Alliance in Jacksonville, Fla. "The project has a less than reasonable chance of survival."

Florida voters gave the go-ahead to the high-speed project in 2000, after an unusual move in which a citizens' committee created a constitutional amendment that they put to a direct vote, by-passing the state legislature.

"Everybody was shocked when that thing passed," Richardson said. "In the transportation community, we all realized (the project) was pie in the sky. None of us supported it. All of a sudden, we've got this mandate now in our constitution that by the end of 2003, we're going to have a high-speed rail program started."

A similar move by another citizens' committee resulted in the now-famous "pig amendment," which states sows cannot be held in gestation pens while they're pregnant. That is now also written into Florida's constitution.

Richardson and Ross Capon, another rail advocate, said there's no money for a fast train. Alia Faraj, spokesperson for Governor Bush, said the project might be put before voters again to repeal it from the constitution.

"The residents of Florida should have an opportunity to re-address the issue," Faraj said.

Bombardier and Fluor, however, have tried to present the project so transparently and concretely that state legislators can't say no. Both companies proposed to assume some of the financial risk of the system, offering to take a first-loss position of $50 million if ticket revenues don't make up for operating and debt costs. Bombardier estimates the state's cost of running the railway will be a maximum of $46 million U.S. a year over its lifetime.

"That's pretty attractive economics," Stewart said. "That's the cost of building a major highway interchange."

Bombardier is also hoping Florida can be a springboard for other markets for the JetTrain. Other states considering high-speed rail projects include California and Texas. Bombardier built the only existing high-speed train service operating in North America, the Acela Express. It runs on the Boston to Washington corridor.

Tuesday, October 28, 2003

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