This week
fiightglobal.com 11-17 June 2019 | Flight International | 9
Decision day
dawning for Qantas
Project Sunrise
This Week PJ
ust days after closing the sale of
its Dash 8 twin-turboprop pro-
gramme, Bombardier appeared to
take another huge step towards an
exit from the commercial aviation
business with the revelation of
talks with Mitsubishi Heavy In-
dustries (MHI) over the sale of the
CRJ line of regional jets.
MHI has its own regional jet in
development via subsidiary
Mitsubishi Aircraft, which is
bringing to market two variants of
the Pratt & Whitney PW1200-
powered MRJ.
The appeal of an ageing region-
al jet model that dates back to the
days of Canadair – and for which
there are just 44 orders in the
backlog – may not be immediate-
ly obvious. But analysts believe
there is enough attraction, notably
an established maintenance net-
work, to tempt the Japanese in-
dustrial conglomerate.
“There are definitely syner-
gies between what Bombardier
can do for Mitsubishi and what
Mitsubishi can do for Bombar-
dier,” says Michel Merluzeau,
director at aerospace research
and consultancy Air.
A CRJ purchase “solves a lot of
Mitsubishi’s problems – if they
can find a price that works,” says
Richard Aboulafia, vice-presi-
dent at consultancy Teal Group.
In essence, Mitsubishi does
not covet the CRJ itself, but rather
the global structure that
accompanys it: everything from
engineering and certification ex-
pertise to customer relationships
and support.
Airlines shy away from buying
aircraft produced by smaller air-
framers that lack a global support
network; the Sukhoi Superjet
100’s maintenance struggles
being a cautionary example.
“[Mitsubishi] wants the cus-
tomer base around the world, the
support network,” says Addison
Schonland, partner at consultancy
AirInsight Group. “[They] need
certification people, engineering
and production people.”
“It may also give Mitsubishi the
facilities to build the MRJ in North
America itself,” says Chris
Seymour, head of market analysis
at consultancy Ascend by Cirium.
Both parties confirmed on 5
June that they are negotiating over
the CRJ, but stress that the talks
may not lead to an agreement.
Bombardier has made no
secret of its intention to sell the
CRJ, with chief executive Alain
Bellemare saying repeatedly over
recent months that the company
was pursuing “strategic options”
for the programme.Bombardier’s outstanding or-
ders for 44 CRJ900s are enough to
keep production running through- It also supports about 1,
in-service aircraft. But observers
doubt CRJ production will survive
much longer unless Bombardier –
or a buyer – updates the aircraft,
which they view as unlikely.
“There seems to be very limit-
ed prospects of boosting CRJ
sales. Indeed, it makes little sense
to run two similar-sized pro-
grammes together, especially
when the MRJ is the newer gen-
eration,” says Seymour.
Estimating the CRJ’s worth is
difficult, however: analysts note
that most value lies in Bombar-
dier’s engineering and produc-
tion prowess, and global support
and services. The price also de-
pends on how badly Mitsubishi
wants the programme.
In a 5 June report, Canadian
financial institution Desjardins
pegs the CRJ’s value at $500 mil-
lion to $1 billion.
“It’s very hard to value,” says
Aboulafia. “There’s one buyer for
the CRJ and its Mitsubishi. And
there’s only one party selling what
Mitsubishi badly needs – that’s
Bombardier. It’s about as non-
liquid [an asset] as it gets.”
Aboulafia and others see the
CRJ potentially giving Mitsubishi
Aircraft an “interim product” to
sell while it develops the MRJ, in
addition to ongoing revenue from
support services.
Mitsubishi Aircraft has strug-
gled with development and
certification of its MRJ range, a
programme originally launched
in 2008. The first variant – the
larger, 76-92-seat MRJ90 – re-
mains in flight testing, with Mit-
subishi Aircraft now pegging first
deliveries for mid-2020, seven
years later than the original 2013
entry-into-service target.
The picture is further compli-
cated by scope clauses in the pilot
contracts at US mainline carriers.
These limit regional partners from
operating aircraft with a maxi-
mum take-off weight (MTOW)
above 39,010kg (86,000lb); at39,600kg, the MRJ90’s MTOW
exceeds that threshold.
Mitsubishi Aircraft does have
the smaller MRJ70, which will
follow the arrival of the bigger
model. Although the MTOW of
the MRJ70 is well under the cap, it
carries just 69 seats in a two-class
layout, eroding its edge against the
Embraer 175 and CRJ900, which
can accommodate 76 seats.
The airframer may be close to
addressing the disparity, with re-
ports suggesting it may unveil at
the Paris air show a 76-seat variant
weighing less than 39,100kg.Trade secreTs
But certification struggles remain,
as does a federal lawsuit filed by
Bombardier alleging that Mitsubi-
shi Aircraft and flight-test partner
AeroTec stole certification-related
trade secrets in a campaign to
poach former Bombardier staff for
the MRJ programme.
Mitsubishi Aircraft denies the
allegations, but a deal could offer
both parties a face-saving end to a
potentially costly legal stand-off.
Though many variables re-
main, analysts see a remarkable,
albeit uncertain, path forward for
Mitsubishi Aircraft.
If it launches a 76-seat MRJ that
US regional airlines can actually
fly, if it establishes a North
America production site, and if it
gains global product support then
the MRJ could be the only clean-
sheet, modern-engined, scope-
clause-compliant regional jet
available anywhere. ■acquIsItIon Jon Hemmerdinger Boston
crJ joins Q for Bombardier’s exit door
Canadian airframer confirms negotiations with Mitsubishi over sale of regional jet line and its global support network
“Buying the crJ solves
a lot of mitsubishi’s
problems – if they find
a price that works”
richard aboulafia
Vice-president, teal GroupAirteamImagesLarge in-service fleet is
one attraction for buyer