MIAMI – Mitsubishi Heavy Industries (MHI) and Bombardier have announced June 1, 2020, as the closing date for the acquisition transaction of Canadair Regional Jet (CRJ) Program.
From June, the program will be operated under a new group under MHI RJ Aviation Group (MHIRJ), which will have the leadership in maintenance, support, refurbishment, marketing, and sales activities for the CRJ Series aircraft and type certificates.
As part of the deal, CRJ related services and support network in Québec, Ontario in Canada; Chicago, West Virginia, and Arizona in the United States; in addition, Frankfurt, Germany will be now linked with MHIRJ operations.
The CRJ production facility in Mirabel, Québec will remain with Bombardier, which will continue to supply components and spare parts. The manufacturer will also continue with the assembly of the current CRJ backlog on behalf of MHI.
A closing date after a year-long agreement
Last year, MHI and Bombardier entered into a definitive agreement, whereby MHI would acquire Bombardier’s regional jet program for a cash consideration of US$550m, payable to Bombardier upon closing, and the assumption by MHI of liabilities amounting to approximately US$200m.
In the initial agreement, CRJ production was expected to conclude in the second half of 2020, following the delivery of the backlog of aircraft.
According to Bombardier’s press release at the time of the agreement, the Canadian manufacturer would retain certain liabilities representing a portion of the credit and residual value guarantees in the sum of US$400m.
The amount of such liabilities, payable by Bombardier over the next four years, is fixed and not subject to future changes in aircraft value.
Furthermore, under the agreement, Bombardier’s net beneficial interest in the Regional Aircraft Securitization Program (RASPRO), which is valued at approximately US$180m, would be transferred to MHI.
Lastly, the agreement contemplates a reverse break fee payable by MHI under certain circumstances.
Further SpaceJet plans
Regarding the current global aircraft industry situation, the Japanese multinational company also announced in yesterday’s statement that it would provide a holistic servicing and support solutions for the sector, especially for the CRJ Series aircraft and new regional jets from the Mitsubishi SpaceJet family.
The SpaceJet brand was previously marketed as the Mitsubishi Regional Jet (MRJ), the development program, one which was marred with delays, as the first delivery to launch customer All Nippon Airways was then slated for this year, two years over its expected entry into service.
However, MHIRJ completed the Flight Test Vehicle 10 (FTV10) test flight. Now, the next step for MHIRJ is to enter the final phase of certification flight testing for the SpaceJet M90.
From a lawsuit to an acquisition date, all within 2 years
In 2018, Bombardier sued the aircraft unit of Japan’s MHIRJ, saying former Bombardier employees passed on trade secrets to help Mitsubishi’s more often than not delayed regional jet project.
The 92-page lawsuit alleged that Bombardier employees who were recruited by Mitsubishi or AeroTEC brought with them confidential documents and data related to the certification of airplanes in Canada and the United States.
Bombardier sought at the time of the lawsuit a preliminary injunction to prevent Mitsubishi Aircraft and AeroTEC from using the information it said was taken.
According to a report by Reuters, the lawsuit stated the employees sent key documents to their personal email accounts prior to leaving Bombardier and joining the Mitsubishi project.
A spokeswoman for Mitsubishi Aircraft responded at the time that the company believed Bombardier’s claim was “groundless,” but that It would “consider the details and prove this in the appropriate venue.”
Now, with last year’s agreement between the two companies and this week’s announcement of its final acquisition date, MHIRJ and Bombardier seem to have dotted all the I’s and crossed all T’s, further enhancing a critical strategic business area for MHI in its near and long-term expansion plans.