ANALYSIS-For Bombardier, rail deal won't offset aerospace

* Bombardier in talks on train deal for up to 8 bln euros

* Some analysts say deal is no game changer

* Shares down 0.8 percent at C$4.94 in Toronto

TORONTO, Nov 19 - Bombardier Inc's <BBDb.TO> train-building segment has built a lot of momentum on the back of stimulus spending around the world, but the company's share price is unlikely to rebound until aircraft orders perk up.

Bombardier's share price is well off its March lows, but it is still down more than 40 percent from its peak in the summer of 2008 before the global economic downturn nearly froze the market for its regional aircraft and business jets. Analysts don't expect that situation to improve much any time soon.

The company got some welcome news on Wednesday when France's SNCF said it is in exclusive talks with Bombardier, the world's No. 1 trainmaker and No. 3 planemaker, to buy rail cars in a deal valued at as much as 8 billion euros ($11.98 billion). [ID:nB249797]. That follows recent wins for the rail division in India, China and Italy.

While the French deal is significant and points to long-term growth, it does little for the company's short-term outlook, says Cameron Doerksen, an analyst at Versant Partners.

"The transportation segment is doing quite well," he said. "They've won some significant orders recently and the outlook for additional contracts is positive, so there are no concerns on that side of the business. For me it's more the aerospace business that is of concern."

That view seemed to be reflected in Bombardier's share price, which slipped 0.8 percent on Thursday to C$4.94 on the Toronto Stock Exchange. The SNCF announcement came after North American markets closed on Wednesday.

Signs of continued pain in aerospace may emerge when the company reports fiscal third-quarter results on Dec. 3.

Some market players expect it to announce further cuts in production, a sign that aerospace is still caught in the doldrums.

In April, Montreal-based Bombardier said it was laying off 3,000 employees to adjust to collapsing demand for business jets, its most profitable segment. The cuts came on top of nearly 1,400 layoffs earlier in the year.

The company has already said it expects to report fewer deliveries of business jets in the second half of the year than it did in the first half.

"That business is still decelerating, at least in terms of deliveries, and the of course the order flow is still quite low," said David Tyerman, an analyst at Genuity Capital Markets.

"The aerospace area won't rebound any time soon and in fact it's slowing still in terms of deliveries, which could potentially put pressure on sales and profits."

AEROSPACE REBOUND SEEN IN 2010 OR 2011

Tyerman said the aerospace segment may have a little bit more downside before it begins to turn around, with production and deliveries picking up at the back end of 2010 or in 2011.

Doerksen said he expects aerospace margins to remain depressed through next year.

The company says it is well positioned for when the market improves and has big hopes for its new CSeries 100 to 149-seat aircraft as airlines look to replace aging fleets. [ID:nLP177802]

Most analyst are bullish on Bombardier's prospects once the aerospace segment picks up.

"Of course that requires the economy to be on sounder footing and at this point it's getting better, but it's not booming by any means," said Tyerman.

As for the SNCF rail deal, it represents the largest-ever framework agreement Bombardier has signed. If completed, it would guarantee work for years to come.

Even so, some analysts say that it's no game changer.

"The amount of money we're talking about is not nearly as big when you convert it into earnings per share," said Genuity's Tyerman.

He said the deal could generate about 29 cents per share for the company divided up over a stretch of seven to 10 years, with deliveries likely beginning in 2013. ($1=$1.06 Canadian)