We are mere months away from the production of the final CRJ passenger jet. Mitsubishi Heavy Industries (MHI) announced this morning a deal to acquire Bombardier‘s regional jet program for a $550 million cash payment plus $200 million in debt. MHI’s stake covers the maintenance, support, refurbishment, marketing, and sales activities for the CRJ Series aircraft, including the related services and support network. Facilities in Montreal; Toronto; Tucson; and Bridgeport, WV are covered by the deal. The facilities in Northern Ireland and Morocco are not.
We are working hard to ensure that we provide new profit potential for airlines and set a new standard for passenger experience. 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.– Seiji Izumisawa, President & CEO of MHI
While the sales activities are included in the purchase those resources will no longer be selling the CRJ series of aircraft, however. Instead, they will be focused on the SpaceJet, MHI’s new product line. The maintenance and engineering capabilities acquired from the CRJ program will enable Mitsubishi to quickly establish the necessary and critical customer support functions for its new aircraft lines.
The CRJ assembly line in Mirabel is not part of the deal. Bombardier will continue to operate its manufacturing facilities to support spare parts for the CRJs as well as for its business aviation segment. It will also complete the construction of the existing CRJ backlog on behalf of MHI, with the final delivery expected in mid-2020.
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With this deal Bombardier has nearly completely divested its commercial aircraft businesses from the company. The only remaining bit is the wing manufacturing facility in Belfast that is already on the market. “We are very pleased to announce this agreement, which represents the completion of Bombardier’s aerospace transformation,” said Alain Bellemare, President and Chief Executive Officer, Bombardier Inc. “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.”
The price tag to build a global support network, including MRO operations, from scratch would be significantly higher for MHI had it tried to develop such on its own. Moreover, the CRJ support operation delivers an initial income stream for the company. It also presents the opportunity for MHI to demonstrate its capabilities and potentially convert existing CRJ customers to the SpaceJet product line as the fleet replacement cycle plays out.
The SpaceJet M90 is expected to be certified in the coming year and the smaller, US Scope Clause-compliant M100 redesign is underway, securing a 15-frame commitment at the Paris Air Show last week. It is also assumed that the 150ish orders held by two US regional carriers will convert to the smaller M100 once it is available in the 2022+ timeframe.
The company also unveiled minor tweaks to the SpaceJet interior design during the Paris Air Show, most notably increasing the overhead bin size. That will help, but it faces an uphill battle as it seeks to grow into the market. The support infrastructure and customer base will help, though MHI must still prove that it can deliver the planes and maintain the high support standards expected of its airline customers.
More from the 2019 Paris Air Show
- Airbus A321XLR: The future of single-aisle long-haul travel
- IAG makes a MAX move in Paris
- SmartSky boosts sales channel with Honeywell Aerospace VAR deal
- Different business models, same aircraft model: American, Frontier and JetBlue take on the A321XLR
- Boom’s supersonic timing slips
- Mitsubishi’s SpaceJet buys Bombardier’s support