Mitsubishi Heavy Industries (MHI) will acquire Bombardier's regional jet program for a cash consideration of $550 million.
The assumption by MHI of liabilities will amount to approximately $200 million and will see the Canadian plane and train maker now focus its entire operations on profitable business jets and passenger rail cars. Under the agreement, Bombardier’s net beneficial interest in the Regional Aircraft Securitisation Program (RASPRO), which is valued at approximately $180 million will be transferred to MHI.
Under the agreement, MHI will acquire the maintenance, support, refurbishment, marketing, and sales activities for the CRJ series aircraft, including the related services and support network located in Montréal, Québec, and Toronto, Ontario; as well as its service centres located in Bridgeport, West Virginia, and Tucson, Arizona.
This acquisition is complementary to MHI’s existing commercial aircraft business, in particular the development, production, sales and support of the Mitsubishi SpaceJet commercial aircraft family.
The maintenance and engineering capabilities of the CRJ program will further enhance critical customer support functions, a strategic business area for MHI in the pursuit of future growth.
Seiji Izumisawa, president & CEO of Mitsubishi Heavy Industries, commented: “As we outlined during the recent Paris Air Show, we are working hard to ensure that we provide new profit potential for airlines and set a new standard for passenger experience.
"This transaction represents one of the most important steps in our strategic journey to build a strong, global aviation capability. 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.
“The CRJ program has been supported by tremendously talented individuals. In combination with our existing infrastructure and resources in Japan, Canada and elsewhere, we are confident that this represents one effective strategy that will contribute to the future success of the Mitsubishi 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.”
The CRJ production facility in Mirabel, Québec will remain with Bombardier. Bombardier will continue to supply components and spare parts and will assemble the current CRJ backlog on behalf of MHI. CRJ production is expected to conclude in the second half of 2020, following the delivery of the current backlog of aircraft.
Bombardier will also retain certain liabilities representing a portion of the credit and residual value guarantees totalling approximately $400 million.
This amount is fixed and not subject to future changes in aircraft value, and payable by Bombardier over the next four years.
The transaction is currently expected to close during the first half of 2020 and remains subject to regulatory approvals and customary closing conditions.