Talgo Will Convert Renfe’s ‘Hotel Trains’ Into New High Speed Trains

Talgo wins bid for RenfeTalgo's high velocity train

Talgo confirmed that Renfe has awarded it the contract to convert three of its ‘hotel trains’ currently not in use into High Speed AVE trains, These will be capable of travelling at 330 kilmotres per hour.

The project is worth some 101 million euros, which will increase to 151 million if Renfe takes up the option in the contract for the refurbishing of six additional trains, Talgo said in a statement.

So initially the Spanish train manufacturer will convert 156 coaches from hotel trains into high speed trains.

The contract envisages installing a variable gauge system in the trains so that they can run without any delays on both conventional rail lines and those of the AVE (narrower).

In addition, the project includes carrying out other improvements in the trains, like installing new air-conditioning systems or equipment for providing Wifi connection, amongst other things, sector sources told Europa Press.

The trains to be transformed are the last ones Renfe acquired and they are already fitted with seats instead of beds. Renfe is investing in reconverting these trains which are not being used while it is finalising a plan to buy new material. The plan will be presented next March, just the first phase, and includes the purchase of locomotives and commuter trains for a total of 1.5 billion euros. With this plan, the company is looking to renew part of its current fleet of trains and bring in new ones to meet the foreseeable increase in passengers, while also facing up to the challenge of rail passenger traffic being opened up to competition by 2020.

For Link Securities’s experts this is a relatively small contract for Talgo, “but it fits in with its strategy of complementing its portfolio of big high speed contracts with smaller contracts”, both in the commuter train segment as well as in this new segment of train refurbishment. Furthermore, it will provide more recurrent results and more visibility for its portfolio.

Link Securities has a target price of 6,39 euros per share for Talgo.