page 60 Bombardier Inc. Annual Report 2003-04 As part of the Metronet consortia, Bombardier Transportation was awarded contracts for the modernization of the London Underground BCV (Bakerloo, Victoria, Central and Waterloo and City Lines) and SSL (Subsurface Lines). The turnkey contracts include project man- agement and the supply of 1,738 metro cars and new signalling systems for the Victoria Line and Subsurface Lines, along with the main- tenance of the rolling stock. In the early stages of the project, Bombardier Transportation will begin resignalling work, refurbish the existing District Line rolling stock and build two pre- production trains for the Victoria Line. The total value of the contracts is $7.9 billion over 15 years. The new subway car fleets will be built between 2008 and 2015.  passenger rolling stock to 44% for calendar year 2003, compared to 42% last year. In the Asia-Pacific market, Bombardier Transportation maintained its position with a market share of more than 20%. The key industry drivers in the rolling stock market are vehicle replace- ment, infrastructure investment, the public policy environment, liberalization and region- alization in Europe, and new entrants, such as private operators. Bombardier Transportation expects that the major operators in Europe and North America will continue with fleet replacement programs in fiscal year 2005. The orders for passenger rolling stock awarded in calendar year 2003 in the world- wide rail industry were valued at  € 10.2 billion ($16.1 billion), down from  € 13.6 billion ($20.0 billion) the previous calendar year. This decrease is mainly related to a reduction in orders in the North American market, from $3.0 billion US ($4.7 billion) in calendar year 2002 to $0.6 billion US ($0.8 billion) in calendar year 2003. The decrease in North America is mainly related to project delays and the shift in funding priorities in the United States. Representing over 80% of total orders, Europe remained the most important pas- senger rolling stock market, with total orders increasing from  € 7. 3 billion ($10.8 billion) to € 8.5 billion ($13.4 billion). The liberalized U.K. rail market contributed significantly to this growth. Asia-Pacific maintained a relatively stable market share of approximately 10%  of the total orders. Orders in North America accounted for 5% of total orders in calendar year 2003, down from 28% the previous year. In the highly-competitive European market, Bombardier Transportation has improved its leading position with a 42% market share for calendar year 2003, compared to 38% last year, mainly due to the Metronet orders. In North America, Bombardier Transportation slightly increased its market share for With a legislative agenda aimed at liberalizing the European rail industry, the European Union’s goals are to open access to freight and pas- senger traffic for operators and to separate rail infrastructure and rail operations ownership and management, supporting market growth.  This process is already underway in several Growth in electrical propulsion, train control and management follows the trend in the  new-build rolling stock markets. Bombardier Transportation will also further explore already identified growth markets such as China, Russia and India.  Electrical propulsion, train control and  management systems are core capabilities for Bombardier Transportation. As the market leader in this area, Bombardier Transportation is able to offer its customers competitive solu- tions that benefit from economies of scale and proven reliable products. Bombardier Transportation determines its annual market share as an average based on the total value of orders in the industry during the past three years. During fiscal year 2004, Bombardier Transportation received orders for a total of $7.3 billion in rolling stock, compared to  $7.9 billion the previous fiscal year. Rolling stock includes commuter and regional trains, intercity and high-speed trains, metro/rapid transit, light rail vehicles, locomo- tives, freight cars and propulsion and controls for the vehicles.  European countries. During the year, cross- border freight lines have been opened to international freight companies. The passing of the second rail legislative package by the European Commission is a further step in liberal- izing European rail by harmonizing safety rules, interoperability for cross-border traffic and setting up a European Railways Agency. Due to public budget constraints, several large projects have been postponed in Western Europe and, further- more, state-owned operators concentrated on replacement of their fleets rather than on growth. While the North American passenger  rail market reached a low level in 2003, it is ex- pected to recover to normal levels in the next year. Demand for rapid transit vehicles will drive the market in North America, as transit  agencies embark on major rehabilitation and replacement programs for their aging fleets.  Asia is a promising market for rail equipment and services. A growing population, prosperity and urbanization are expected to result in investments in transportation infrastructures to improve quality of life and make Asian cities accessible. Asian intercity rail programs,  such as those in China and India, will further contribute to market growth. Bombardier Transportation expects the worldwide rolling stock market to grow by 2% to 4% annually over the next five years. A. Rolling stock Orders Market and prospects 