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Britain subsidizes Bombardier's rail contract to save jobs

Aircraft and train builder Bombardier Inc. said Wednesday it had won a government-subsidized order for 130 new rail carriages, months after it announced it would cut about 1,400 jobs in Britain and questioned its future in the country.

Paul Roberts, the Canadian manufacturer's chief representative in Britain, said in a statement that the $295 million deal was "an encouraging step in the right direction" as the firm reviews long term plans for its train-building plant in the central England city of Derby.

Britain's Ministry for Transport said it is providing an 80 million pounds subsidy toward the deal with rail operator Southern, which will see Bombardier supply extra carriages to add capacity on busy rail routes between central London and southern England commuter areas.

Bombardier lost out to Germany's Siemens AG in July in bidding for a $2.19 billion contract to build new passenger trains. At the time, Bombardier announced it would lay off about 446 permanent staff and 983 temporary hires. Bombardier said no permanent workers have yet left their jobs.

"I look forward to Bombardier workers in Derby being among the winners of this important deal," Transport Secretary Justine Greening said, though the firm insisted it was too early to say whether any jobs would be protected by the deal.

Bob Crow, general secretary of the RMT transport union, said the deal was welcome, but that more work was needed "to secure the long-term future of train building in the U.K."

Bombardier said it hoped to agree a contract early next year on a project to convert dozens of trains to hybrid power and would press hard to win train building work from Britain's major CrossRail initiative, a new rail line from west to east London being built at a cost of around $25 billion.

Decisions on those projects "will be integral elements in considerations as part of Bombardier's U.K. review," Roberts said.