An attempt by Mitsubishi Heavy Industries to buy only the aircraft maintenance network of Bombardier’s CRJ regional jet program has been rebuffed by the Canadian company, which wants to sell both the loss-making production lines as well as the more lucrative services operation.
According to a Nikkei report, Bombardier has told MHI it will not allow “cherry-picking.” Another person familiar with the talks said the Canadian company was insisting on selling the unit as a whole, rather than breaking it up.
The two companies confirmed on June 5 that they are in advanced discussions about a possible sale of the CRJ, the last of Bombardier’s fully owned commercial jet programs. Both sides, however, added that there is no guarantee of agreement.
But MHI is hoping to acquire the CRJ program in a bid to help it overcome challenges with its own long-stalled Mitsubishi Regional Jet project, Japan’s first homegrown passenger aircraft. Mitsubishi has so far postponed deliveries five times — from 2013 to mid-2020 — and incurred costs of more than 600 billion yen ($5.5 billion).
MHI’s biggest interest lies in CRJ’s maintenance and repair operations, which will be critical if Mitsubishi wants to win orders for its passenger jets. The company is planning to release two types of regional jets, one seating 90 passengers and another seating about 70. Mitsubishi is going to formally unveil the smaller version — which is set to be the company’s core model — at the Paris Air Show later this month.
“Supporting an aircraft throughout its life is a very significant piece of the revenue,” said Alex Bellamy, chief development officer of Mitsubishi Aircraft, the subsidiary overseeing the project. He estimated that 20-30 per cent of regional jet program revenues would come from providing maintenance services.
“That means, as an OEM, Mitsubishi Aircraft has to focus on building the right product — that’s very important — but building the right customer support system to support that product is equally as important.”