U.K. Hands Bombardier Rail $2.3 Billion Brexit Jobs Boost

(Bloomberg) -- Britain granted Bombardier Inc.’s train unit 1.7 billion pounds ($2.3 billion) in export funding, bolstering an English plant ahead of a looming merger with France’s Alstom SA.

Bombardier will use the funds to invest in the factory in Derby after winning a 2.4 billion-euro ($2.9 billion) contract to build trains for new monorail lines in Egyptian capital Cairo, according to a statement Wednesday. The loan guarantee will directly support about 100 jobs at the plant, which employs 2,000 people.

Britain is stepping up U.K. Export Finance’s role in promoting global trade links in the wake of Brexit, with the Bombardier commitment a record for the credit agency for an overseas infrastructure project. UKEF also recently backed loans to British Airways and EasyJet Plc.

The Egyptian deal represents the first export of U.K.-built rolling stock in more than 12 years, providing a boost for the Litchurch Lane plant days before the Alstom takeover of Berlin-based Bombardier Transportation.

The acquisition unites two of Europe’s three big trainmakers and could endanger some sites as the coronavirus crisis weakens economies and dents demand for public transport. It is due to conclude on Jan. 29, according to the French company, which shut down its last U.K. train factory in 2004.

Derby’s position as a prime manufacturing center is also at risk amid job cuts at aero-engine maker Rolls-Royce Holdings Plc and question marks over production at Toyota Motor Corp.’s plant there following the split from the European Union.

Read: Brexit Deal Is Too Little, Too Late for U.K.’s Car Industry

Under the Bombardier deal, UKEF is guaranteeing 80% of borrowing totaling 2.5 billion euros from lenders led by JPMorgan Chase & Co. Robert Maccabe, a spokesman for the agency, said export credit is the norm for such projects and that the company wouldn’t have been able to tap such funding privately.

He said terms of the deal require a specified level of British content in the trains. As well as boosting employment at Litchurch Lane, it’s also regarded as attractive in giving the U.K. Bombardier’s only European monorail capability.

The Derby plant expects to build 1,000 rail-cars this year and has work to see it through 2022, excluding the monorail contract, spokesman Will Tanner said. Since Alstom’s exit, Japan’s Hitachi Ltd. has established an assembly line in northern England, while Siemens AG is developing a plant to supply London’s subway and aid its bid to produce trains for the High Speed 2 line.

(Updates with UKEF comments from seventh paragraph, U.K. competitors in last)