CRJ Program To Become MHI Regional Jet Support Operation June 1

Credit: Bombardier

BEIJING—Bombardier’s CRJ program, but not its production facilities, will become part of a marketing and support unit of Mitsubishi Heavy Industries (MHI) on June 1, eventually backing the Japanese group’s SpaceJet regional jet.

The two sides have agreed that the necessary conditions have been met for closing the intended transaction on June 1, MHI said, adding that the operation would become part of a new subsidiary called MHI RJ Aviation Group (MHIRJ).

Although MHI is acquiring the type certificates for the CRJ, Bombardier said it will keep the facility in Mirabel, Quebec that has been making the regional jet. Bombardier will continue to build the CRJ on behalf of MHI until sometime in the second half of 2020, when the backlog will be cleared, and the type will leave production. Bombardier said it will also continue to supply components and spare parts to MHI.

Bombardier said it expects to receive net proceeds of $550 million from the sale. 

When Bombardier and MHI announced the intended transaction in June 2019, it was clear that the prize for MHI was not the CRJ, a fading product that competed with the Japanese company’s own SpaceJet, but the marketing and support infrastructure behind it—something the SpaceJet program lacked. Notably, the CRJ program also has long-established relationships with regional jet operators.

MHIRJ will be based at Mirabel, outside Montreal. It will provide maintenance, refurbishment, marketing and sales, MHI said. Its servicing and support activity would be provided for “the CRJ series aircraft and, eventually, for the Mitsubishi SpaceJet family of next-generation regional jets.”

MHIRJ will have service centers, support offices and parts depots in important aviation hubs in the U.S., Canada and Germany, MHI said.

The Japanese group said the CRJ program would be operated “under” MHIRJ, implying that it will be only part of the sales and support subsidiary, presumably alongside the equivalent operation that Mitsubishi Aircraft has already set up for the SpaceJet.

Bombardier said it delivered five CRJs in the 2020 first quarter (Q1). Releasing its Q1 financial results on May 7, the Canadian company also said it expected to close as planned the sale of its aerostructure businesses in Belfast, Northern Ireland, and Morocco to Spirit AeroSystems.

Announcing the planned date for closing the CRJ acquisition, MHI also said it was writing down the full value of goodwill, assets acquired, and liabilities assumed with the deal and allocated to the SpaceJet business unit. Forecast at ¥50-70 billion ($470-660 million), the full amount will be written down in the fiscal year ending March 2021 “since it is difficult to estimate the cash flow in the future for the SpaceJet business at present,” MHI said.

The SpaceJet, formerly the MRJ, is due for certification and first delivery sometime after March 2021. Mitsubishi Aircraft is not stating a more specific schedule for the much-delayed program.

Bradley Perrett

Bradley Perrett covered China, Japan, South Korea and Australia. He is a Mandarin-speaking Australian.