CALGARY – In the midst of a significant restructuring of Canadian transport manufacturing giant, Bombardier Inc., the Montreal-based company has exit-stage-left on commercial aviation and now setting its sights on the more lucrative industries of mass-rail transport and business jets.
Bombardier’s rapid exit from the Commercial Aviation landscape has accelerated with the proposed sale of its CRJ program to the Japanese conglomerate, Mitsubishi.
The final sale of its CSeries program (rebranded the A220) to European icon Airbus SE earlier this year, and closing a multi-million dollar deal with Canada Longview Aviation for the sale of its Q400 turboprop aircraft several weeks ago, marked the beginning of the end for Canada’s prime airplane manufacturer.
The struggling train and plane maker is attempting to mitigate costs and plug the drain of a seemingly unending money-losing commuter jet business unit.
The company remained tightlipped and declined to go into detail about the potential CRJ acquisition rumor, stating “in light of recent media reports, Bombardier believes it is prudent to advise stakeholders that it is in discussions with Mitsubishi Heavy Industries Ltd. (MHI) with respect to its CRJ Program.”
Bombardier Regional jets, a program which began in 1986 with the purchase of Canadair—and the bread and butter of Bombardier financial success—slowly diminished over time in market share and value with the introduction of newer, sleeker E175 narrow-body aircraft models offered by Brazilian competitor Embraer SA, entering the Canadian marketplace in 2005.
As 2019 took shape, Bombardier was losing money hand over fist with about 50 planes on backorder and shipping a meager 20 regional jets in 2018, compared to the 26 the year before that—lightyears away from the hundreds of jets it sold yearly in the early 2000s.
According to media reports, Mitsubishi was working on a 74 and 90-seat jet that would comply with U.S. airspace clauses but due to systematic glitches including being years behind schedule and too heavy to fly regional routes – it would take a shift of colossal magnitude to make it possible for the company to fly in the world’s busiest air travel market on time.
“The CRJ and Embraer’s E-Jet program are the only two programs that satisfy North American contract agreements between major airlines and pilot unions limiting the number and size of aircraft that may be used by a carrier’s regional unit,” analyst Benoit Poirier of Desjardins Securities told the Times-Columnist.
Mitsubishi also likely sees the major market potential in Asia, where regulations that require carriers to operate at least 25 regional aircraft before graduating to larger planes would make the CRJ a stepping stone for the company, added Poirier.
In a statement released Wednesday by Mitsubishi, the company advised, “It is true that we are in discussions relating to a possible transaction involving Bombardier’s regional jet program with strict adherence to the applicable competition rules and regulations.”
“However, neither has any corporate decision been made nor are there any prospects as to the contents of such a transaction. If ever any such decision is made, we will disclose as necessary in accordance with the applicable stock exchange regulations.”
For the CRJ program, Bombardier could fetch a similar price to its sale of the Q400 series, which netted a cool U.S. $250 million.
It is expected that the deal between Mitsubishi and Bombardier will be announced next week at the Paris Air Show in Le Bourget, the perfect time to inject a much-needed boost to an ill-fated Mitsubishi MRJ program, which has failed, numerous times, to meet its production and flight testing milestones.
Currently, the MRJ program has managed to sell 213 orders with 194 options, with US regional carrier, SkyWest, as its biggest customer with 100 MRJ90 units booked.