26 Jun 2019
Posted in Press Release
Bombardier’s sale of commercial aircraft division to Mitsubishi Heavy Industries is part of larger trend, says GlobalData
Following the news on 25th June 2019 that Japan-based Mitsubishi Heavy Industries has agreed to buy Bombardier’s Canadair Regional Jet (CRJ) aircraft program for US$550m,
Nicolas Jouan, Aerospace, Defense & Security Analyst at GlobalData, offers his view:
“Bombardier’s emblematic CRJ regional jets series has been one of the most successful in the world since its introduction at the beginning of the 1990s, but started to lose steam in 2017 with reducing orders and contracting revenues, becoming a drag on the company’s results. The Canadian manufacturing group follows its Brazilian rival Embraer, which sold its own regional jet business to Boeing in July 2018.
“Demand for short to medium range narrow body aircrafts could not cope over the past few years with an increase of supply from Asian actors (China’s COMAC series and Japan’s Mitsubishi MRJ), making life more difficult for traditional players. The universal success of Airbus A320neo and Boeing B737MAX series on the narrow body segment with optimized fuel consumption also impacted Bombardier and Embraer’s results. The European and American aerospace giants have managed to expand their margins at an unequaled pace during the past decade, leaving behind smaller players and subcontractors.
“Bombardier will keep ownership of the more profitable specialized aircraft unit, mostly consisting in patrol aircrafts and C4ISR platforms. The proportion of defense products in Bombardier’s aerospace division will therefore increase, reducing overall revenues but sanitizing the company’s net earnings. Mitsubishi on the other hand will be able to leverage Bombardier’s CRJ expertise for its own nascent regional jet business, the already mentioned MRJ series.”