Bombardier exits commercial jet sector
Montreal—bombardier Inc. has completed the sale of its regional jet business to Mitsubishi Heavy Industries Ltd. for $550 million (US), cementing the plane-maker’s departure from commercial aviation following a three-decade run.
The sale of its CRJ aircraft series paves the way for Bombardier to focus on its sole future income stream — private jets — as the company ramps production back up following factory closures during the COVID-19 pandemic, which cost the company up to $800 (U.S.) million last quarter.
The deal adds sorely needed capital to a firm whose debt tops $9 billion and whose backlog of business jet orders is falling as clients and companies rethink the value of a private plane purchase in a recession.
Once a cash cow for the Montreal-based company, the CRJ series now struggles to generate profits, 29 years after its maiden voyage. For the past five years, Embraer SA’S E175 narrow-body aircraft has dominated the U.S. market, where the majority of regional jets are sold.
“There’s been limited orders for the aircraft and limited expectations that they would ever see a material number of orders in the future,” Altacorp Capital analyst Chris Murray said in a phone interview.
“The market has been moving away from it.”
Under the agreement, Mitsubishi scoops up the CRJ’S maintenance, marketing and sales activities along with 1,400 employees, but not its manufacturing operations.
The deal includes the related services and support network located in Montreal and Toronto and service centres in Bridgeport, W.VA., and Tucson, Ariz.
Bombardier will continue to assemble the current CRJ backlog — 15 planes as of March 31 — on behalf of Mitsubishi, with all deliveries expected to be made before 2021.
The transaction is part of a string of sales aimed at reducing the company’s overhead and injecting liquidity in the wake of debt racked up to fund its C Series commercial aircraft program.
In February, Bombardier announced the sale of its remaining stake in that business — rebranded as the Airbus A220 — to Airbus SE, marking the end of its failed bid to take on the commercial aircraft duopoly of Airbus and Boeing.