LONDON – Bombardier is about to complete its departure out of commercial aviation manufacturing through a full acquisition deal from Mitsubishi Heavy Jets (MHI) for its Canadair Regional Jet (CRJ) program.

The deal will see MHI pay up to $550 million as a cash consideration upon closing of the transaction. The assumption by MHI of Bombardier’s liabilities will amount to $200 million.

Bombardier’s net beneficial interest in the Regional Aircraft Securitization Program, valued at $180 million, will also head to MHI.

When this deal closes, which is expected by the first half of 2020, the new owners will acquire the maintenance, support, refurbishment, marketing, and sales activities for the CRJ program.

“As we outlined during the recent Paris Air Show, we are working hard to ensure that we provide new profit potential for airlines and set a new standard for passenger experience,” said Seiji Izumisawa, President and CEO of MHI.

“This transaction represents one of the most important steps in our strategic journey to build a strong, global aviation capability. It augments these efforts by securing a world-class and complementary set of aviation-related functions including maintenance, repair, and overhaul (MRO), engineering and customer support”, Izumisawa added.

“The CRJ program has been supported by tremendously talented individuals. In combination with our existing infrastructure and resources in Japan, Canada and elsewhere, we are confident that this represents one effective strategy that will contribute to the future success of the Mitsubishi SpaceJet family,” he said.

As part of the deal, the CRJ Production in Mirabel will remain with Bombardier where it will supply components and spare parts as well as assemble the current CRJ backlog.

“MHI has a decades-long history in Canada, and I hope this transaction will result in the expansion of our presence in the country and will represent a significant step in our growth strategy,” Izumisawa said.

The handover is expected to take place at this plant by the second half of 2020.

Alain Bellemare, the President & CEO of Bombardier, expressed gratitude. “We are very pleased to announce this agreement, which represents the completion of Bombardier’s aerospace transformation,” he noted.

“We are confident that MHI’s acquisition of the program is the best solution for airline customers, employees, and shareholders. We are committed to ensuring a smooth and orderly transition,” Bellemare added.

Bellemare added that “with our aerospace transformation now behind us, we have a clear path forward and a powerful vision for the future. Our focus is on two strong growth pillars: Bombardier Transportation, our global rail business, and Bombardier Aviation, a world-class business jet franchise with market-defining products and an unmatched customer experience.”

Bombardier’s Exit From The Commercial Aviation Landscape

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.

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.

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.

Mistubishi Reinventing Itself

This is a big step for Mitsubishi as it will now have an aircraft family in its portfolio which has generated good levels of success.

Currently, the MRJ program has managed to secure 213 orders and 194 options, with US regional carrier, SkyWest, as its biggest customer with 100 MRJ90 units booked.

Photo: Chris Sloan.

But with the addition of the CRJ backlog, the newly combined portfolio will have a much larger market share in the regional plane market, securing satisfied Bombardier customers who will be looking to upgrade and keep its current fleet of CRJs.