Mitsubishi Heavy Industries has taken a big step in achieving its aviation ambitions today by integrating the commercial jet business of Canada's Bombardier into its jet program. What this means for the Japanese giant is that the CRJ Regional Jet is now a Mitsubishi aircraft.
Purchased by the Japanese industrial giant for $550 million, the acquisition of the Bombardier CRJ was meant to give Mitsubishi a secure foothold in the aircraft service and maintenance sector. Along with this, it was also providing itself with a platform for the Mitsubishi SpaceJet family of jets.
Mitsubishi has gone into the red for the first time in 20 years
Mitsubishi's ability to finance the deal has come under increased scrutiny after the Japanese Goliath saw its business go into the red for the first time in 20 years. Last month in a cost-savings move, Mitsubishi retreated from its overseas SpaceJet operations and consolidated all its activities at its headquarters in Nagoya.
In its aviation sector, Mitsubishi has around 2,500 workers, of which 1,800 are in Japan, 100 in Montreal, and 610 at its United States headquarters in Renton and flight test center at Moses Lake. When speaking with the Nikkei Asian Review (NAR), a spokesperson for Mitsubishi Aircraft reaffirmed that it was committed to the SpaceJet program saying,
"As we consolidate, the hope is to reduce redundancies while still maintaining the core competencies we have developed."
The SpaceJet M90 was on track to be certified early next year
Having accumulated more than 3,000 hours of flight testing, the 88-seat SpaceJet M90 was on track to be certified in the spring of 2021. This has now been upended due to the COVID-19 crisis and put a damper on Mitsubishi's newly acquired maintenance and service centers.
When speaking about this with NAR associate professor of business at the State University of New York Empire State College David Pritchard said,
"When the whole industry is downsizing, right-sizing and fleet-optimizing, the last thing they need is a brand-new airplane, all-new training, all new spare parts."
Given the facts on the ground, Mitsubishi had no choice but to cut costs and scale back on its desire to build the 76-seat SpaceJet M100 that it had been working on for the American market.
Mitsubishi already has 163 orders and a further 124 letters of intent for aircraft, but this could all fall apart if some airlines go belly up due to the imminent financial crisis brought on by the coronavirus.
Mitsubishi needs to find a partner for its SpaceJet
If you take a look at the crystal ball, you will discover that for Mitsubishi to achieve its goals, it will probably have to find a partner.
The most obvious choice, despite a troubled history between China and Japan, is the Commercial Aircraft Corporation of China, or Comac. The Chinese company would appear to have bottomless pockets and would like to have access to Bombardier's global service network and Mitsubishi's knowledge of FAA certification. However, Japan looks upon the SpaceJet program as a national project, and will not let the nation's leading defense contractor get in bed with a Chinese government-owned company.
Following the sale to Mitsubishi, Bombardier can now move away from commercial aircraft and focus on building private jets.