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Cruise ship order fails to lift Alstom
By Laurence Frost, AP Business Writer
March 19, 2004

PARIS -- French engineering giant Alstom announced two big cruise ship orders Monday, but shares in the maker of high-speed trains and power plants continued to slide amid renewed doubts about its future.

Confirming comments made this weekend by Social Affairs Minister Francois Fillon, Alstom said an order from Italy's Mediterranean Shipping Company SA for two large cruise vessels was all but sealed.

Alstom declined to give the value of the deal or other financial details but said the first of the two ships would be delivered in June 2006.

The deal is contingent on MSC arranging financing for its purchase of the two 1,275-cabin ships -- with an option on a third. Analysts estimate the ships are priced at about 300 million euros ($370 million) each.

Patrick Boissier, head of the shipbuilding division, said the order showed that Alstom Marine had been right to focus on the cruise-ship market, "which will continue to grow in the medium-to-long term."

But the news failed to rally investors, and Alstom shares closed down 7.7 percent at 1.69 euros ($2.07) in Paris.

Trading in Alstom has been turbulent since the company warned last Wednesday that it was set to break the terms of a 3.2 billion euro ($3.9 billion) government-backed bailout that saved it from bankruptcy less than six months ago.

J.P. Morgan analyst Andreas Willi said the announcement of the new orders had been "largely ignored" as European markets continued their decline Monday in the wake of last week's terror attacks in Spain.

With a profit margin of 1.5 percent at Alstom Marine last year, Willi said, a 600 million euro ($740 million) contract is unlikely to make a big impact on operating income.

But it could save cash that might otherwise have been spent cutting some of the 4,500 jobs at the shipbuilding division that runs the Chantier de l'Atlantique shipyard in Saint-Nazaire, western France.

"There may be less restructuring charges because they don't have to lay off as many people as they otherwise would have to," Willi said.

Alstom has lurched from crisis to crisis since 2000, when it revealed that turbines bought from Swiss-Swedish ABB Ltd were defective -- a problem it has since spent about 4 billion euros ($5 billion) fixing.

Under the September 2003 bailout deal, yet to be approved by the European Commission, the French government gave Alstom 300 million euros ($367 million) in subordinated loans, and a group of French banks put up 1.2 billion euros ($1.5 billion). The remainder came from a capital increase and bond issues.

Chief executive Patrick Kron said Wednesday that Alstom's profit margin for the year ending March 31 was likely to fall below target, forcing it to renegotiate the bailout after breaking key financial conditions. Failure to agree on new terms with creditor banks could lead to a debt default and bankruptcy.

Alstom blamed its shrinking profitability on problems with a U.S. power plant contract. It also said its two-year restructuring program would cost 50 million euros ($61 million) more than planned and was ahead of schedule -- leading to 150 million euros ($184 million) in extra costs this year.

Company spokeswoman Severine Gagneraud declined to say Monday whether any of the planned cuts would be made at the shipbuilding division.

Any revision of Alstom's rescue deal will have to be approved by the European Commission in Brussels, which is due to rule in May on its compliance with state aid rules.

Mario Monti, head of antitrust at the EU executive, could insist on selloffs by Alstom in exchange for the green light. German rival Siemens has already said it would be interested in acquiring part of Alstom's power plant business, but analysts say such an outcome would raise antitrust concerns of its own.

Alstom shares have fallen a total of 23 percent since the company announced its latest debt crisis Wednesday.

Associated Press

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Alstom slides on bailout admission
March 19, 2004

PRESSURE is mounting on French power generation to shipbuilding group Alstom, which has seen further steep falls in its share price after chairman Patrick Kron admitted this week that the terms of a €3.2Bn ($3.9Bn) government-backed bailout, arranged just six months ago, are unlikely to be met. News on Monday that Alstom subsidiary Chantiers de l’Atlantique had landed a two-cruise ship contract from MSC, which initially spurred interest, has been overtaken by concern that MSC still has to arrange financing, and that Alstom will need to be split up if it is to survive.

Fairplay

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Could it be possible that MSC will not get its newbuilds from Chantiers d'Atlantique?

Amtrak has stated they will buy no more, and have recently taken the maintenance contract from Alstom to inhouse. The TGVs were marvelous machines, but adapting them to US use was not that easy. Problems abound.

[ 03-19-2004: Message edited by: Cambodge ]

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Originally posted by Cambodge:
Not to mention that Alstom is the prime contractor ( or whatever, I am not sure of the technical arrangements) behind the Accela express trains of Amtrak. US-configuresd versions of the TGV, they have been proven to be high-maintenance technical turkeys!

Amtrak has stated they will buy no more, and have recently taken the maintenance contract from Alstom to inhouse. The TGVs were marvelous machines, but adapting them to US use was not that easy. Problems abound.

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Originally posted by Commodore:
The Acela Express trainsets are high maintenance pieces of garbage! Figures, with a company like Alstom behind them. Not to go off topic, but I always thought the Swedish X-2000s were better.

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WAIT WAIT WAIT, I could be wrong but I am sure that BOMBARDIER built the Acela trains NOT Alstom. Amtrak has sued Bombardier and so has the New York City MTA, because Bombardier built half of the the new subway cars for the IRT lines (Kawasaki built the other half) and while the Kawasaki cars have been great the Bombardier built cars have had problems.

(Joe, whatever happend to RAIL TALK????)

[ 03-19-2004: Message edited by: CGT ]

And they had to be designed to FRA specs in regard to accident (crush and buffer) worthness. Specs are MUCH higher in N.America than in Europe because, among other things, our passenger trains share tracks with big heavy freight trains with big, heavy locomotives and such. Such accidents as the ICE wreck in Germany a few years back, in which the train was opened like a sardine can would not take place in the USA. Wrecks sure, we have always had them, but trains built with the structual integrity of aircraft - no.

The heavier trains (Sons of TGV) could not simply be adapted from TGV designs. (Which I maintain was not properly thought out). Also they tilt, which TGVs do not.

It makes the case for the proper implementaion of my former discipline, Operations Research, in which proper questions, not answers are formulated.

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Originally posted by mec1:
Is there a sight called Trainspotter Talk? If so, use it.

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Actually I had proposed RAIL TALK to Joe some time ago, even breaking down each forum similar to CRUISE TALK. I thought that any site devoted to the discussion of Travel that already has AIR TALK, CRUISE TALK, and HOTEL TALK would be remiss if it did not include RAIL TALK. Joe had said he would get it up and running after a "software upgrade" or something, but that was many moons ago..

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Originally posted by Darrell:
Don't Quote me on this, but I believe that the Acela Express train sets are a combination of two technologies. The TGV Locomotives from Alstom, and the X2000 tilt mechanism for the pax cars, all built by Bombardier in Canada. And being a TA in Wash DC who books them a lot, Yes, they did start out with lots of problems, and have gotten better, but no guarantees. My best friend was on one to NYC and it broke down in the middle of nowhere, they pulled up a crummy unreserved regional train and everyone had to get off the Acela onto it... Standing Room ONLY for half the pax. And Amtrak only offered a "We're Sorry".. nothing more, no voucher, no rebate, nothing.

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