Bombardier leaves commercial aviation with $ 550 million in sales of regional aircraft to Mitsubishi - HailNewsUp.com: provides the latest news from India and the world

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Tuesday, June 25, 2019

Bombardier leaves commercial aviation with $ 550 million in sales of regional aircraft to Mitsubishi

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Bombardier Inc. said on Tuesday it would sell its regional jet business that loses money to Japan's Mitsubishi Heavy Industries Ltd (MHI) for $ 550 million in cash, in an agreement that marks the departure of the Canadian manufacturer of aircraft and aviation trains. commercial.

Bombardier, based in Montreal, combined its aviation units to focus more on profitable commercial aircraft and passenger cars, after facing a cash crisis in 2015 and bringing its flagship commercial aircraft to the market.

The news of the agreement made that Bombardier shares rose up to 5% in the morning's operations.

As part of the agreement, which is expected to close in the first half of next year, the Japanese firm will also assume a debt of $ 200 million.

"We believe that the transaction is positive since it generates better performance than we had anticipated and the company's exposure ends in a program that we believe was an obstacle to earnings," said AltaCorp analyst Chris Murray in a note.

"In addition to Bombardier's focus on its core jet business and rolling stock/transport business, the potential leverage reduction associated with this spin-off could be greater than we anticipated," wrote Citi analyst Stephen Trent in a note.

Bombardier will continue to assemble its regional aircraft (CRJ) but will stop manufacturing the aircraft in the second half of 2020, after it finishes delivering the remaining orders.

CRJ's profitable aftermarket sales, engineering expertise and heavy maintenance centers in the United States would be useful for Mitsubishi, which is trying to develop and certify its program of delayed regional reactors, the MRJ.

"It's an important step for us in general," said Dan Lachmann, spokesperson for MHI.

Around 1,600 people work in the CRJ program, including production employees and employees who provide after-sales services. About 40% of employees are in Canada.

Mitsubishi is "committed" to Bombardier's workforce, as engineers and customer service workers, Lochmann said by telephone from Japan. He could not comment on the CRJ production workers.

Lochmann could not say if Mitsubishi would install an installation at Mirabel for the engineering staff.

The agreement would be a boost to Japan's civil aviation ambitions, even when Canada leaves the market for commercial aircraft with less than 100 seats.

Bombardier and Mitsubishi had previously said they were holding talks on the regional plane's program, confirming a report on the industry news site The Air Current.

Mitsubishi is trying to develop its regional jet program MRJ, which has been delayed for a long time, and which has been renamed as "SpiceJet".

The Japanese firm is trying to certify the plane, which was delayed several years with its first client, ANA Holdings Inc, which now expects delivery in 2020 instead of 2013 as originally planned.

The production of Bombardier regional aircraft is expected to stop in the second half of 2020, after the delivery of the current portfolio of aircraft.

Bombardier shares have risen 7.9% this year compared to a 15.4% increase in the main index of the Toronto Stock Exchange.