Bombardier Maintains Market Leadership in Rail, Continues Evolution for Future Success.

MONTREAL -- Bombardier Transportation is maintaining its position as the world's leading supplier of rail transit solutions and is poised for continued success in the future, said President Andre Navarri at the 2005 UITP World Congress in Rome. Performance improvement initiatives launched 15 months ago at the rail business are taking root, Mr. Navarri said, and the company is headed in the right direction.

For fiscal 2005, Bombardier Transportation generated revenues of $7.6 billion US and maintained market share leadership in key industry sectors such as rolling stock (32%), services (9%) and total transit systems (40%). First quarter results for the rail business announced last week were positive for the fourth quarter in a row, and included an 8% increase in revenues, as well as a healthy order backlog of $21.2 billion US. Bombardier Transportation also generated new orders in 10 countries valued at $1.6 billion US, a $700 million US increase over the same period last year.

At the UITP World Congress, Bombardier announced another signing, a $43 million US (35 million euro) order to upgrade 60 ETR 500 powerheads for Trenitalia (Italian Railways) in Italy.

Preparing for the Future

"We are maintaining market leadership and also positioning our business to grow that leading market position over the long term," said Navarri. "There are solid opportunities for growth out there, and we are actively molding the business to take advantage of them."

Andre Navarri was appointed to Bombardier Transportation's top post in February 2004. Since then, he has presided over an aggressive strategy to increase operating efficiency and profitability, align production capacity with market demand, improve project management and heighten customer responsiveness. Bombardier's rail business returned to profitability in fiscal 2005 and continues to show performance improvements in fiscal 2006.

Mr. Navarri, who was appointed chairman of the Association of European Railway Industries (UNIFE) in May, said one of the key challenges for the passenger rail industry in Europe and around the world is improving the overall economics of rail-based transportation systems. Demand for efficient and reliable public transit is growing, but tight public budgets present significant challenges to many transit operators, particularly those in urban centres grappling with rapid growth and congestion. Operators around the world are facing demands to provide more comprehensive transit service with increasingly limited resources.

"We need alternativetransit solutions that help growing cities breathe easier, but they have to be cost effective for communities to obtain and operate," said Mr. Navarri. "How do suppliers collaborate more closely with operators, and help them succeed both operationally and commercially? That is an important focus now because the supplier who best responds to that question will step up as the future leader in the industry."

What Operators Want

Andre Navarri said the majority of operators he speaks with ask for enhancements in two general areas. First, they want additional attention placed on the end-user riding experience - special services and amenities that transform public transit into a more productive, enjoyable experience. Adjustable work areas; on-board access to computer, entertainment and information technologies; dining options; lighting and seating options; and other special features can attract new passengers, generate additional revenues and build repeat ridership.

As one example, Bombardier is working with Zagato, a world-renowned Italian industrial design house on leading-edge design concepts that will potentially define very-high-speed rail projects in China and Italy. The concepts were unveiled April 13, 2005 at the Salone del Mobile in Milan, Italy, the world's leading design event. They represent a worldwide breakthrough in aerodynamics, aesthetics, functionality, interior comfort and future adaptability, and mark the beginning of a new era in very-high-speed rail functionality.

Second, operators want common product platforms that deliver commonality and lower operating costs, but with more options available to customize those platforms for specific needs. Mr. Navarri says passenger rail is moving closer to an approach used in the automobile industry where customers select a basic car model and select from a list of options to arrive at the final product they want.

Bombardier's modular approach to standardized product platforms takes a similar approach, promoting high performance, interoperability and relatively low costs, while maintaining flexibility to adapt products for regional variations in infrastructure. One example is the Bombardier TRAXX MS multi-system freight locomotive, a member of the TRAXX locomotive product family. TRAXX MS locomotives delivered to SBB Cargo in May 2004 operate on both the alternating-current network in Switzerland and the direct-current network in neighboring Italy.

Another example is the AGC family of multiple units now being delivered in France. The AGC platform allows operators to choose from seven versions of the vehicle, including electric, diesel or versions powered by a combination of the two. Bombardier's global platform approach is also the foundation for successful product families such as Bombardier FLEXITY light-rail vehicles and Bombardier Movia metro vehicles.

Growth Opportunities

Mr. Navarri is optimistic about the future of passenger rail and identified three key factors offering potential for growth: emerging markets in Asia-Pacific and eastern Europe, development of trans-national rail corridors and common signalling protocols in Europe, and growing trends toward outsourcing of certain rail activities, such as maintenance and services, from operators to third-party providers.

In terms of emerging markets, China is making significant investments in new infrastructure and Bombardier's in-country presence and broad product portfolio are leading to successes. In the first quarter alone, Bombardier received orders for 20 high-speed trainsets and 361 commuter cars from the Ministry of Railways, along with an for an airport people mover system at the Beijing Capital International Airport.

Andre Navarri also pointed to emerging opportunities with new and prospective members of the European Union in Eastern Europe, where a number of governments are gearing up to invest in national transportation systems by replacing obsolete rolling stock and rail infrastructure.

Italy, the host country for the 2005 UITP World Congress, is also a key market for Bombardier. For example, the company is part of a consortium building the ETR 500 high-speed trains and is also developing new design concepts that could influence future very-high-speed rail projects. Bombardier is uniquely positioned to support high-speed-rail development in Italy through its strong industrial base, its leading-edge design concepts for very high-speed trains and its strong experience in the high-speed-rail market sector. Bombardier has played a role in the development of 95% of all high-speed trains operating in Europe today.

Bombardier, FLEXITY, MOVIA and TRAXX are trademarks of Bombardier Inc. or its subsidiaries

About Bombardier

A world-leading manufacturer of innovative transportation solutions, from regional aircraft and business jets to rail transportation equipment, Bombardier Inc. is a global corporation headquartered in Canada. Its revenues for the fiscal year ended Jan. 31, 2005, were $15.8 billion US and its shares are traded on the Toronto Stock Exchange (BBD). News and information are available at www.bombardier.com.

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