Mitsubishi In Talks To Acquire Bombardier’s Regional Jet Unit

Bombardier’s withdrawal from the passenger jet market continues with news the Canadian aircraft manufacturer is in talks with Mitsubishi to sell is regional jet unit.

If the sale goes ahead, it would mark a fundamental shift in the small passenger jet landscape. The competitive battle between the once Brazilian owned Embraer and the Canadian owned Bombardier would transform into a battle between the Japanese owned Mitsubishi and the now Boeing owned Embraer.

Mitsubishi in talks to acquire Bombardier's regional jet unit
Mitsubishi is in talks to buy Bombardier’s regional jet unit. Photo: Colin Brown Photography via Flickr

Both of the small jet manufacturers have struggled in recent times. Bombardier’s commercial jet division made a loss of USD$157 million in 2018 and Embraer is warning of little or no profit in the next year or two.

Forecast International suggests that over 6,000 regional jets will be sold by the various manufacturers over the next 15 years. But Bombardier is expected to capture only 500 of those sales.

There is some speculation that a final deal could be announced during the Paris Air Show this month.

Last year Bombardier was suing Mitsubishi

It comes just a year after Bombardier sued Mitsubishi for targeting its employees to steal proprietary information. Simple Flying reported in October last year that Mitsubishi was “aggressively” targeting its employees, poaching 92 of them.

Mitsubishi in talks to acquire Bombardier's regional jet unit
Last year Bombardier was suing Mitsubishi. All water under the bridge now? Photo: Tataquax via Flickr

Bombardier sought an injunction to stop the Japanese manufacturing powerhouse from hiring any more of its employees. It also wanted to stop its former employees from sharing information about Bombardier’s developments. This was in particular regarding testing and certification process of the CSeries and Global 7000 and 8000 aircraft.  

That all seems to be water under the bridge now. According to a report in The Air Current, Bombardier had initiated sale talks with several potential buyers but are now talking exclusively to Mitsubishi.

Bombardier is exiting the regional passenger jet sector

As part of a five year plan, Bombardier has sought to exit the regional passenger jet sector and focus on corporate jets. In 2018 it sold the ubiquitous Q400 turboprop line to Viking Air, saying it was a “slow seller.” Viking Air has built a business by buying unwanted lines from Bombardier.

Bombardier has recently sent mixed messages about its regional passenger jets. Airbus brought a 50.01% stake in Bombardier’s C Series regional jets in 2017. Airbus promptly rebranded it as the A220 and as of January 2019 had secured over USD$11 billion in sales, having sold 536 of the planes to various airlines including Swiss International and Delta.  

Mitsubishi in talks to acquire Bombardier's regional jet unit
One of Delta’s Bombardiers at Phoenix Sky Harbour. Photo : Colin Brown Photography via Flickr

In February this year, Bombardier launched the 50 seat CRJ550 (a variant on the CRJ700), pitching the jet as the only North American made jet of this size. United Airlines was the launch customer, taking 50. Things have been sluggish since that first sale.

Mitsubishi doubles down

Mitsubishi wants a slice of the small regional jet market. The Japanese manufacturer has had a regional jet unit (known as MRJ) with Toyota has as a minority partner. But for several years MRJ has struggled.

MRJ has been around for over a decade but sales have been slow and the program riddled with design issues, cost overruns, and delays. At the end of 213, MRJ had 213 orders, the biggest customer being SkyWest who are buying 100 MRJ90s. Japanese airlines are showing some support, with JAL taking 32 of the jets and ANA buying 15.

Mitsubishi in talks to acquire Bombardier's regional jet unit
A Mitsubishi Regional Jet inbound to Grant County International Airport. Photo : Jay Inslee via Flickr

Mitsubishi’s regional jet division finished 2018 with a negative net worth of USD$979 million.

With its interest in Bombardier’s small passenger jet division, Mitsubishi is showing no signs of backing out of the sector. Given Bombardier’s small future order book, the immediate benefit for Mitsubishi would seem to be access to Bombardier’s maintenance network, skilled employees, and ties with North American airlines.

Perhaps, following last year’s legal stoush, Mitsubishi’s interest in Bombardier is primarily driven by a desire to access what it had once attempted to surreptitiously snaffle.

At the time of writing, the sale to Mitsubishi has not being finalised. But the discussions between Mitsubishi and Bombardier are receiving heavy media attention. An announcement may or may not be made at the Paris Air Show. Regardless, further shakeouts in the regional passenger jet sector seem inevitable.