News Article

‘no cherry-picking’ in Bombardier talks with Mitsubishi

Mitsubishi wants Bombardier's maintenance operations only

The Canadian company has rejected an effort by Mitsubishi Heavy Industries to purchase only the aircraft maintenance network of the CRJ regional jet program from Bombardier, which wishes to sell both the loss-making manufacturing units and the more profitable service activity.

Bombardier informed MHI it’s not going to allow “cherry-picking,” a person knowing the scenario said. Another individual acquainted with the discussions said that instead of splitting it up, the Canadian firm insisted on buying the unit as a whole.

The two businesses are discussing a potential selling of the CRJ, the last of Bombardier’s entirely held business jet programs, in sophisticated debates. Given the loss-making of the CRJ program, a contract could still be valued at several hundred million USD. There is no assurance of consensus on the part of both parties.

But with its own long-stalled Mitsubishi Regional Jet initiative, Japan’s first homegrown passenger aircraft, MHI hopes to obtain the CRJ program to assist it in solving difficulties. Until now, Mitsubishi has delayed shipments five occasions— from 2013 to mid-2020— and accumulated over 600 billion yen ($5.5 billion) in expenses.

The main concern of MHI resides in the servicing and repair activities of CRJ, which will be critical if Mitsubishi wishes to gain contracts for its cargo aircraft. The firm plans to produce two regional jet models, one carrying 90 people and one sitting around 70. At the Paris Air Show earlier this month, Mitsubishi will officially unveil the larger variant— which is expected to be the core model of the company. Whether it can gain any airline order agreements will rely in part on its capacity to provide clients with seamless servicing assistance, most of whom are probable to be in North America.

“It’s a very crucial bit of revenue to support an aeroplane throughout its lifetime,” said Alex Bellamy, Chief Development Officer of Mitsubishi Aircraft, the supervising design agency. He projected that the provision of repair facilities would account for 20-30 per cent of national airline program profits.

“This implies that as an OEM, Mitsubishi Aircraft must concentrate on developing the correct product— which is essential— but constructing the correct customer support structure to service that item is similarly essential.” Mitsubishi Heavy has collaborated with U.S. based Boeing to provide MRJ customer support but is eager to have its customer service capacities in-house.

A CRJ sale, which holds 50 to 100 passengers, after more than 30 years would signal Bombardier’s departure from business aircraft. It continues last year’s selling to European aircraft manufacturer Airbus of significant interest in its troubled 100-150 seater C Series program.

Bombardier is a leading competitor in the world’s tiny and medium-sized cargo aviation industry, along with Brazil’s Embraer, with a 30-40% percentage of worldwide national jet supply. Currently, around 1,300 CRJ aircraft are in service worldwide.

READ: Japan’s Mitsubishi Aircraft accuses Bombardier of trying to limit competition for regional jets

Bombardier’s expected departure from regional aircraft is excellent news for Mitsubishi, whose future is experiencing increasing confusion as airlines withdraw orders owing to errors.

Bellamy said the program was on its way to delivering successfully. “We understand that MRJ’s growth was lighter than we wished, but this is now the starting stage between history and the potential that we can attract important worldwide requirement,” Bellamy stressed.

“With the industry expanding today, a rival shifting out and (another) a company concentrating on other tasks, Mitsubishi Aircraft Corporation is well placed— likely the greatest in our past — to go and catch the national aviation company,” he said in a program review.

Aircraft testing has been advancing and next year is anticipated to finish, Mitsubishi said. But it is doubtful that the 90-seater aircraft will attract buyers in the U.S. as it reaches the 76 passenger threshold established between carriers and pilot unions for regional aircraft. In the Paris Air display earlier this month, Mitsubishi seeks to publish a narrower 70-seat model.

Mitsubishi Aircraft President Hisakazu Mizutani also lifted the possibility that in the U.S., the world’s largest regional jet industry, the MRJ could eventually be manufactured. U.S. production was “a possibility in the future” if more demand existed than the Japanese company could meet. Mizutani stated that if it had to wait for the Japanese to construct enough abilities to create the aeroplane, the business could lose chances, he said.

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