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Bombardier CRJ to Mitsubishi – Bombardier Exiting Commercial Aviation

Updated and Republished

This week has been a dream of varied aviation news-content, from new routes to exits to delays. One newsworthy item I want to explain here is Canada’s Bombardier Aerospace CRJ line of jets going to Mitsubishi. We’ll also analyze what Bombardier’s exit from the commercial aviation scene means.

A precursor to the Bombardier to Mitsubishi CRJ transaction

Bombardier CRJ to Mitsubishi
The beautiful CRJ700 Series. Credit: Bombardier

As many of you thought when it sold its CSeries to Airbus, Bombardier was on a mission to off-load its portfolio as soon as possible. The Airbus A220 was named from the Bombardier CSeries when Airbus first acquired the CSeries project in an agreement on July 1, 2018.

Many also thought that Bombardier would be returning to its roots of CRJ’s (Canadair Regional Jet) and Business Jets after offloading their Dash series de Havilland Brand turboprop airplanes.

The Dash, by the way, recently went to the Longview Aviation Capital Corporation.

But, what happened next shows that Bombardier wanted to exit their imprint left within the world of commercial aviation altogether.

Bombardier Exits Commercial Aviation

And yes, then the firecracker news came out indeed!

The news proved that not even the CRJ’s was destined to survive the latest round of sell-offs from Bombardier:

Bombardier just sold its CRJ (Canadair Regional Jet) to the Japanese Mitsubishi Heavy Industries.

The Bombardier CRJ. Video: Bombardier/YouTube.

Creative rebranding

With Bombardier leaving the Commercial Aviation world, its action exhibits a similarity to what Brazilian manufacturer Embraer previously did. Embraer entered a joint venture with Boeing on January 10, 2019.

The Embraer-Boeing action was a direct countermeasure to protect its interests as an answer to the earlier Bombardier-Airbus agreement.

With no direct competition for the Embraer-Boeing products in the Western Hemisphere, Mitsubishi is now taking over the crown jewel of the Bombardier portfolio with great hopes of success.

The benefits of Mitsubishi’s Bombardier strategy

  • The move eliminates the Bombardier versus Mitsubishi competition, reducing the field by one.
  • Mitsubishi gains the knowledge of an (already) established supply chain. And that’s a significant leg up in aircraft design that everyone is familiar with.
  • It transforms a proven successful program that adds to the equation.
  • The move also allows Mitsubishi to gain a foothold in the United States while still being a nimble, efficient operation.

Terms of the Deal

Both Bombardier & Mitsubishi entered into a definitive agreement, whereby Mitsubishi will acquire Bombardier’s regional jet program for a cash consideration of $550 million. The cash is due to Bombardier upon closing. The assumption of liabilities by Mitsubishi Heavy Industries amounts to approximately $200 million.

Besides, Mitsubishi gets the maintenance, support, refurbishment, marketing, and sales activities for the CRJ Series aircraft.

This includes related services and support networks located in Montréal, Québec, and Toronto, Ontario, and its service centers located in Bridgeport, West Virginia, and Tucson, Arizona. In addition, Mitsubishi acquires the all-important type certificates.

However, the production facilities in Mirabel, Quebec will be in control of Bombardier, and it will continue to supply components, parts, and assembly of the current backlog of the CRJ on behalf of Mitsubishi Heavy Industries.

Thoughts of the Deal

CRJ Series Bombardier Mitsubishi
Credit: Bombardier.

Mitsubishi moves up from the kiddie table to the adults’ table. Bombardier restructures itself as an Aviation Business Jet Unit and they will concentrate their efforts within Rail and Transport. 

With the Northern Ireland manufacturing plant for sale, who knows? Maybe Mitsubishi can do a side-deal as it got a portfolio worth more than what they paid for Bombardier?

Or maybe Airbus, as a matter of demonstrating its commitment to the United Kingdom, buys the plant?

But, taking out a competitor the caliber of Bombardier is not an easy task, not even for Airbus.

Update on Northern Ireland plants, November 2019

“It was my opinion that either Mitsubishi or Airbus were going to purchase the plants in Belfast. I was wrong. The sale of the Northern Ireland Aviation plants went to Spirit AeroSystems. I thought that the fight would concentrate around those two, but the purchase of these plants by an American company that isn’t Boeing places this relationship on a better although awkward level.”

Alex Martinez Rivera

Mitsubishi waited patiently to strike at the perfect time

Fighting ATR, Longview Aviation (de Havilland), Embraer-Boeing, and Russian manufacturer Sukhoi in the smaller 76 seat market would be no easy task. There will be a fight for customers between Embraer-Boeing and Sukhoi.

Airbus and Embraer-Boeing are in the 100 seat segment. They are both heavily vested in that segment.

Mitsubishi just got started, and they must be posed for a rivalry-fight for customers.

A deal beautifully designed

Mitsubishi entered a promise to pay Bombardier $500 million for an entire CRJ portfolio. With the right marketing and sales tactics, Mitsubishi could easily recoup the expense.

For example, getting letters of intent to purchase CRJ aircraft in an air show like Farnborough could, in fact, recoup Mitsubishi’s entire investment in just a few days.

In my honest opinion the purchase was a steal for Mitsubishi!

That’s similar to what Disney did when they bought LucasArts for $4 Billion. The Force Awakens (Star Wars VII) recouped the investment money from sales of that one movie, toys, and other marketing methods.

What’s your opinion on Bombardier’s moves? Comments? You can contact me here. Attn: Alex.

Featured Image Credit: The Bombardier CRJ, soon to become Mitsubishi CRJ – Rendering by Bombardier.

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