Bombardier sells regional jet business to Mitsubishi

Bombardier sells CRJ regional jet program to Mitsubishi for $550M

Bombardier sells CRJ regional jet program to Mitsubishi for $550M

He continues that Bombardier Inc. has now finished its "aviation transformation" and will focus on its rail business Bombardier Transportation and Bombardier Aviation, which builds business jets.

The deal is valued at United States $750 million in total, of which MHI will pay U.S. $550 million in cash upon closing of the deal with Bombardier Inc.in the first half of 2020, along with assuming debt amounting to approximately USA $200 million.

"In addition to Bombardier focusing on its core business jet and rolling stock/transportation businesses, the potential leverage reduction associated with this spinoff could be greater than we had anticipated", Citi analyst Stephen Trent wrote in a note.

Bombardier's jet program, or the CRJ, which produces jets to connect regional centres, has no orders beyond 2020 and the company has been trying to find a solution for the division.

Under the deal, Mitsubishi will pay $550 million U.S. in cash and assume about $200 million worth of debt and other liabilities related to the CRJ - an acronym for the Canadair Regional Jet.

The Japanese company will take over all the maintenance, support, refurbishment, marketing and sales activities for the CRJ but not its manufacturing operations, the companies said. About 40% of employees are in Canada.

Mitsubishi is "committed" to Bombardier's workforce such as engineers and customer support workers, Lochmann said by phone from Japan.

Lochmann could not say whether Mitsubishi would set up a facility at Mirabel for the engineering staff. Mitsubishi has been working on its own regional jet program, the MRJ.

The deal will see Mitsubishi Heavy Industries (MHI) pay Bombardier $550m (£432m) in cash and assume liabilities amounting to around $200m (£157m).

The central fuselage of the CRJ aircraft series is designed and manufactured in Bombardier's Northern Ireland Aerostructures operation, which it put up for sale along with its Moroccan operation last month.

CRJ production is expected to conclude in the second half of 2020, following the delivery of the current backlog of aircraft.

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

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