Bombardier Exits Commercial Aviation Game With CRJ Program Sale

According to a press release today, June 25th, 2019, Mitsubishi Heavy Industries (MHI) has acquired the Bombardier CRJ program for $550m USD. The transaction is expected to close in H1 2020 and is subject to conditions.

The new CRJ550 may now be rebranded as the SpaceJet. Photo: Bombardier

This announcement confirms previous rumors that the two firms were in discussions regarding the acquisition of Bombardier’s CRJ program.

The details

Bombardier is set to receive up to $550m USD from MHI upon finalizing the deal. For its part, MHI will acquire the CRJ program and the program’s MRO business, as well as $200m worth of liabilities. MHI will hence become responsible for the marketing, sales, and distribution of CRJ products.

The transaction will further see Bombardier handing over support and service locations in Ontario and Quebec, Canada, as well as in West Virginia and Arizona. This will effectively expand MHI’s North American network.

The CRJ production facility in Mirabel, Quebec, which is also home to Bombardier’s thriving business jet program, will continue to supply parts and assemble the current backlog.

SpaceJet at the heart of the equation

MHI CEO, Seiji Izumisawa, is reported by AIN Online as saying,

“This transaction represents one of the most important steps in our strategic journey to build a strong, global aviation capability … we are confident that this represents one effective strategy that will contribute to the future success of the Mitsubishi SpaceJet family”.

The SpaceJet Program, formerly the MRJ, is set to benefit from this transaction. Photo: Mitsubishi

This transaction closely coincides with MHI’s new push for it’s MRJ program, which was rebranded as the SpaceJet at this year’s Paris Air Show. The SpaceJet program, which is squarely aimed at the U.S. market, will likely benefit from the robust network of suppliers, service centers, and facilities that this deal brings.

This transaction could lead to SpaceJet production in Canada. Photo: Mitsubishi

Speaking on MHI’s Canadian presence Mr. Izumisawa was quoted as saying: “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.”

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Such statements by the Chief Executive may hint at the possibility of a production site expansion in the NAFTA (North American Free Trade Agreement) member country.

Bombardier’s commercial aerospace exit

It’s no secret that Bombardier has sought an exit from the commercial aviation game. After the company sold its over budget but game changing C-series to Airbus, now known as the A220, it sold it’s Q-Series program to Longview Aviation Capital.

Swiss Air showing new livery
Bombardier sold it’s highly efficient C-Series to Airbus in 2017. Photo: SWISS

The CRJ program, although recently refreshed, was the last bastion of Bombardier’s commercial aviation enterprise.

Bombardier’s CEO, Alain Bellare, was quoted in their media release as saying that this transaction represents “the completion of Bombardier’s aerospace transformation” and that Bombardier are “committed to ensuring a smooth and orderly transition.”

Mr. Bellmare further stated, “With our aerospace transformation now behind us, we have a clear path forward and a powerful vision for the future.”

The company will now exclusively focus on its ground rail and business jet functions.

Is this a sad day for commercial aviation? What do you think lies ahead for the SpaceJet? Let us know in the comments.

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Matt

Bombardier has had amazingly poor management. I don’t know what their long term strategy is, because they have been in discussions to sell their rail business as well. Probably just pad the balance sheets for a few quarters so that management can take their golden parachutes and get out. The big losers are the Canadian taxpayers and workers. They have bailed out Bombardier several times, and now even the jobs will go away.

Mitsubishi wins. This eliminates a major competitor to their own jet, and they get a support network.