Railpower Technologies Corp. hopes to deliver 90 to 100 of its diesel-electric hybrid locomotives in 2006 after struggling to ramp up production last year.

"We're planning and doing everything to be in that range," Railpower chief executive Jose Mathieu told a conference call with analysts Friday, a day after the company reported sharply higher annual losses. Railpower produced 32 locomotives last year and had orders for 160 locomotives on its books as of Thursday.

The bulk of the production this year will go to delivering orders from Canadian Pacific and a 98-locomotive order from Union Pacific that will be the company's longest production run so far.

Building production capability in 2006 will be key for Railpower, which lost a potential contract from Union Pacific that went to National Railway Equipment Corp. because Railpower didn't have the production capacity to deliver.

"They wanted 60 more units and they wanted 30 in the second half in of 2006 and 30 in the first half of 2007 and at this point we couldn't have met that capacity requirement," said Gary Eelman, Railpower's executive vice-president.

Pacific International Securities analyst Philip Tulk said he was less concerned about earnings of the company than he was about their ability to execute.

"Investors are rightly focused on challenges going forward for Railpower in particular the company's ability to profitable assemble the 160 locomotives that are in the order book in a timely fashion and generate new orders," Tulk wrote in a note to clients.

"We expect both production and sales to be quiet in the first two quarters of 2006, with Railpower focusing on producing road switchers in volume from the third quarter of 2006."

In a financial report late Thursday, Railpower said it lost $59.9 million for 2005, compared with $15 million a year ago, as the company faced problems with the batteries used in one of its hybrid Green Goat locomotives and costs related to development and initial production cost overruns.

In an unrelated problem, Railpower has also had troubles with some of its locomotives that may have been delivered with defective components related to the battery system that resulted in fires in two locomotives.

Sales for 2005 reached $20.2 million, up from $740,000 a year earlier.

In his outlook, Mathieu said development work has continued in the first quarter of 2006. "As such we do not expect the first quarter of 2006 to be representative of the production and cost levels we are planning for later this year," he said. "As it is not uncommon with young companies that are in transition into commercial production we have encountered some issues, but we believe we have moved aggressively to address them."