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Jun 5, 2019

Bombardier in talks with Mitsubishi on deal involving CRJ program

Bombardier closer to exiting commercial aviation amid CRJ deal talks


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Bombardier Inc. (BBDb.TO) could be one step closer to exiting the commercial aviation business.

Japan's Mitsubishi Heavy Industries Ltd. confirmed Wednesday it’s in talks with the Montreal-based plane and train maker for a possible deal involving Bombardier’s CRJ program but said a decision has not been made. The company did not provide any details about the structure of the possible transaction.

In a separate statement, Bombardier also confirmed the talks and said it would not comment further on the nature of the discussions.

“Before any agreement can be reached further review and analysis by Bombardier management and approval by Bombardier's Board of Directors are required, and Mitsubishi Heavy Industries Ltd. must complete its due diligence review and own analysis and approval process, which are outside of Bombardier's control,” the statement read. “There can be no assurance that any such discussions will ultimately lead to an agreement.”

The confirmations came after The Air Current reported that Mitsubishi was in “advanced negotiations” with Bombardier, and that if the deal is finalized, an announcement could come as soon as the Paris Air Show, which starts June 17.

The deal would mark the end of a historic chapter for Bombardier in commercial aviation as it looks to shift its focus to trains and luxury jets as part of a broader turnaround plan.

The regional jet program once produced the bulk of Bombardier’s revenue, but trains and business aircraft have since overtaken regional jetliners as the company’s main drivers of profit. About 1,500 of the CRJ planes are in service worldwide.

Mitsubishi’s efforts to build its own regional jet – named the MRJ – have been plagued by difficulties after aborted test flights and cost overruns. The program suffered a setback early last year when a U.S. carrier scrapped an order for 40 of the jets because of an internal change in its business policy. ANA Holdings Inc.‘s All Nippon Airways is set to take the first delivery of the MRJ around mid-2020, according to Mitsubishi Heavy.

With files from Bloomberg News