It seems that the worse things get for Bombardier's beleagured rail division, the better things could get for Quebec's Caisse de dépôt et placement.
The Quebec-based transportation firm's ongoing quality-control issues and delivery-delays to major contracts with the New York City Subway, London Underground, Toronto streetcar system and Swiss national railway network have led to the company missing its 2018 financial targets.
Now, the Journal de Montréal is reporting that because of that missed target, the provincial pension fund's stake in the company will rise by 2.5%, to 30%.
Ironically, it is the same quality issues with Bombardier's trains that are now leading to a financial payoff for the Caisse de dépôt that were the key reason the company's bid to supply the rolling-stock for Montreal's upcoming REM rail network — which is being funded by the CDPQ — was not selected. Instead, the CDPQ-led consortium overseeing the REM's construction chose to use trains from Alstom, perhaps Bombardier's fiercest competitor in the North American rail market.
The CDPQ's stake increase in Bombardier would go back down again if the company were to meet its new targets for 2019, which is a distinct possibility: despite missing its 2018 targets, the company did finish the year in the black for the first time since 2013, generating more than $1 billion in revenue last quarter alone.
That news led to a significant rally in the company's shares on the TSX, with its price rising 23% to $2.51.