Bombardier has confirmed it will exit the commercial airliner market with an announcement Wednesday it would sell its regional jet business to Mitsubishi Heavy Industries for $US550 million.
The Montreal-based company said the cash payment would payable upon closing the deal, planned for the first half of 2020.
The decision comes in the face of strong competition in the regional jet market and after Airbus in 2018 took control of what was then the company’s C Series jets and renamed them the A220.
Boeing subsequently announced it was taking an 80 percent stake in Brazilian manufacturer Embraer's commercial aircraft operations.
MHI will assume liabilities of about $US200m and take on the maintenance, support , marketing and sales activities for the CRJ series of regional jets.
This includes the services and support network in Canada and the US as well as the type certificates.
MHI said the acquisition was complementary to its existing commercial aircraft business and particularly its SpaceJet commercial aircraft family.
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“This transaction represents one of the most important steps in our strategic journey to build a strong, global aviation capability,’’ MHI chief executive Seiji Izumisawa said.
“It augments these efforts by securing a world-class and complementary set of aviation-related functions including maintenance, repair and overhaul (MRO), engineering and customer support.”
Izumisawa said he was confident the deal represented an effective strategy that would contribute to the success of the Spacejet family.
“MHI has a decades-long history in Canada, and 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,’’ he said.
Bombardier chief executive Alain Bellemare said the deal represented the competition of Bombardier’s aerospace transformation and "the best solution for airline customers, employees and shareholders".
“With our aerospace transformation now behind us, we have a clear path forward and a powerful vision for the future,’’ he said.
“ Our focus is on two strong growth pillars: Bombardier Transportation, our global rail business, and Bombardier Aviation, a world-class business jet franchise with market-defining products and an unmatched customer experience.”
The CRJ production facility in Mirabel, Québec will remain with Bombardier and the company will continue to supply components and spare parts.
It will also assemble the current CRJ backlog on behalf of MHI until it is delivered in the second half of 2020.
Bombardier will also retain certain liabilities representing a portion of the credit and residual value guarantees totaling approximately $US400 million.
Moody’s Investors Service labeled the sale was credit positive for Bombardier.
“We believe the regional business was consuming cash and needed material investment into a very competitive regional jet market segment,’’ it said.
“ It also provides additional liquidity or deleveraging potential.”
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