ENTEBBE – Bombardier, the maker of jets for Uganda Airlines, has announced that it has sold off its rights to manufacture commercial jets to Mitsubishi Heavy Industries LTD.
Bombardier will give away the Canadair Regional Jet (CRJ) programme to Mitsubishi so that it concentrates on building smaller, private luxury jets.
This means that Uganda Airlines jets will be owned by a new company before they even get to the skies.
Uganda has signed a $190m firm order for four new CRJ900 regional jets with Uganda National Airlines Company.
The first of the two Bombardiers were brought in April.
According to Globe and Mail, Mitsubishi will pay US$550-million in cash and assume liabilities worth about $200-million for the Canadair Regional Jet (CRJ) program, the companies said in a joint statement on Tuesday. Bombardier will assume liabilities worth about US$400-million, including part of the so-called residual value guarantees on the planes, Globe and Mail adds.
The Tokyo-based company will take over all the maintenance, support, refurbishment, marketing and sales activities for the CRJ but not its manufacturing operations, the companies said. Bombardier will build out the remaining CRJ planes on order at a site in Mirabel, Que., which is leased from Airbus. It was not immediately clear how many workers would be kept on once the last of those remaining aircraft are built as expected by the end of next year.
The deal brings to a close the Montreal-based company’s commercial ambitions in aviation after a three-decade expansion.
Bombardier Chief Executive Alain Bellemare is setting a new course for Bombardier as a maker of private luxury jets and rail equipment as part of a five-year turnaround effort. the CEO has said he believes those business lines have higher growth and profit potential.
The two companies confirmed earlier this month they were in talks on a deal.
The CRJ family is Bombardier’s last remaining line of commercial aeroplanes. Divesting the business marks the end of 33 years of commercial aerospace history that began when the company bought Canadair from the Canadian government in 1986 for $120-million.
Celebrated as the planes that launched Canada into commercial aircraft manufacturing in the 1990s, the CRJ program has been largely neglected in recent years as Bombardier concentrated its resources on bringing the C Series airliner to market. Over the life of the program, the planemaker has won firm orders for more than 1,900 CRJ aircraft, but sales have slowed and the company now loses money on each unit it builds.
Industry experts say Bombardier made a strategic error in pushing ahead with the larger C Series instead of developing an all-new regional jet to replace the ageing CRJ. The company never had sufficient resources to market and support the C Series aircraft and compete with giants Boeing Co. and Airbus SE, according to trade publication Aviation Week. Bombardier has since handed control of the C Series to Airbus.
The CRJs are small and narrow regional jets seating between 50 and 104 passengers with a maximum range of roughly 3,000 kilometres. The C Series, rebranded as the A220, are larger planes that can fly twice that distance and designed specifically for the 100- to 150-seat market.