HONG KONG – Bombardier Inc. is in talks to sell its CRJ regional jet program to Mitsubishi Heavy Industries Ltd., a move that would end the Canadian industrial champion’s involvement in commercial aircraft.
Both sides confirmed they were in discussions after the Air Current reported Wednesday that negotiations were at an advanced stage. The aviation blog said an agreement could be announced as early as the Paris Air Show, which starts June 17.
Mitsubishi said no decision had been made, while Bombardier said any agreement would be subject to further analysis by its own management and due diligence by the Japanese manufacturer.
A deal would cap a strategic overhaul at Montreal-based Bombardier, which has already given up control of its single-aisle jetliner program and a turboprop business to focus on making private jets and rail equipment. Tokyo-based Mitsubishi, meanwhile, would further its ambitions to bolster manufacturing of smaller planes and challenge Embraer SA.
The CRJ once produced the bulk of Bombardier’s revenue, but trains and business aircraft have since overtaken regional jetliners as the main drivers of profit for the company and generated 81 percent of sales in the first quarter. About 1,500 CRJ planes are in service worldwide.
The unit could generate gross proceeds of $680 million (¥73.5 billion) according to Citigroup Inc., which compared the operation’s deliveries and average aircraft price to those of the Q400 turboprop operation.
Bombardier’s stock rose the most in three months after the news.
In July, Bombardier handed control of its C Series jetliner to Airbus SE. Last month the Canadian company said it would sell an Irish factory that makes wings for the plane, now known as the A220.
Regional jets, with fewer seats and smaller fuselages, are a different class of aircraft from larger narrow-body planes such as Boeing’s 737 or the Airbus A320. The biggest variant of the CRJ can seat a little more than 100 passengers.
For Mitsubishi, a deal would make it the biggest challenger to Embraer’s commercial-plane business, which is in the process of being absorbed by Boeing Co. A purchase would also help realize a goal the Japanese company has chased for more than a decade: breaking into the elite group of jet-makers.
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. ANA Holdings Inc.’s All Nippon Airways is set to take the first delivery of the MRJ around mid-2020, according to Mitsubishi Heavy.
But a Bombardier sale to Mitsubishi might be complicated by escalating tensions between Beijing and Ottawa, as China — a potential major market for Mitsubishi — could exercise authority over deal approval. China has been squabbling with Canada since the December arrest of Meng Wanzhou, the chief financial officer of Huawei Technologies Co., on a U.S. extradition request.