Christinne Muschi/Bloomberg News
said it would acquire
regional-jet business for $550 million in a transaction that puts the companies on different paths in the aviation sector.
The deal unveiled Tuesday marks the Canadian company’s exit from the commercial passenger-aircraft business following failed bets that it could compete with
in the 100-seat single-aisle plane category.
Bombardier has restructured its aviation division over the past two years, highlighted by its joint venture with Airbus that put the European plane maker in charge of the production and sales of the 110- to 130-seat planes that the Montreal company had originally conceived as the CSeries. Those jets are now rebranded as the Airbus A220.
Just a few weeks ago, Bombardier confirmed the closing of another aviation deal in which it unloaded its Q Series turboprop aircraft to an affiliate of Longview Aviation Capital Corp. Bombardier will now focus on its business-aircraft franchise and its rail division.
The deal “represents the completion of Bombardier’s aerospace transformation,” said Chief Executive Officer Alain Bellemare. “We are confident [Mitsubishi Heavy’s] acquisition of the program is the best solution for airline customers, employees and shareholders.”
Shares of Bombardier rose nearly 3% in early Tuesday trading. Bombardier said it would assemble the remaining backlog of roughly 30 regional jets on behalf of Mitsubishi Heavy, with work expected to conclude in late 2020. A Bombardier spokesman said the company hopes the affected 350 workers at its Mirabel, Quebec, plant can be redeployed within the organization to other jobs, including the possibility of a transfer to Airbus.
As part of the deal, Mitsubishi will assume $200 million in Bombardier liabilities and receive $180 million credit from Bombardier related to bank financing.
Meanwhile, Japan’s Mitsubishi said the deal represents the next step to expanding its aerospace and defense business. The unit lost money in its last fiscal year, squeezed by investment in its new SpaceJet regional aircraft and from commercial customers—notably Boeing on the 787—and military partners, with
set to take on the rest of the F-35 assembly destined for Japan’s Self-Defense Forces.
The deal underscores Mitsubishi’s interest in the sales and support network linked to Bombardier’s regional-jet program as the Japanese plane maker tries to clear a path to market for its SpaceJet.
The company rebranded the plane at the recent Paris Air Show, with a new model targeted at the U.S. market, where pilot contracts restrict the size of aircraft. The first delivery of the SpaceJet to
parent ANA Holdings Inc. is set for mid-2020, or some eight years behind schedule, with the new model set to arrive in 2023.
“This transaction represents one of the most important steps in our strategic journey to build a strong, global aviation capability,” Seiji Izumisawa, Mitsubishi Heavy’s CEO, said in a statement issued by Bombardier. He added the deal also augments the company’s efforts to secure aviation-related functions including maintenance and repair support.
Mitsubishi is testing the SpaceJet in the U.S. but hasn’t said where it would assemble the planes. Analysts said the Bombardier deal opened up Bombardier’s Mirabel facility as a potential site, given possible demand from North American carriers, as well as sites in the U.S. including Alabama and Texas.
“Future plans will be announced once the transaction is closed in early 2020,” said a Mitsubishi spokesman, who declined to comment further.
—Doug Cameron and Robert Wall contributed to this article.
Write to Paul Vieira at [email protected]