Bombardier has agreed to sell its regional jet program to Mitsubishi Heavy Industries for US$550 million.
The Japanese company will also acquire around US$200 million in debt as part of the deal.
When complete, the deal will see Mitsubishi acquire the maintenance, support, refurbishment, marketing and sales activities for the CRJ Series aircraft.
This includes the related services and support network located in Montréal, Québec, and Toronto, Ontario, as well as service centres located in Bridgeport, West Virginia, and Tucson, Arizona.
The deal marks the end of an era for Bombardier, which will withdraw from the commercial jet market.
The Canadian company sold its stake in the C Series programme to Airbus last year as part of a five-year turnaround plan.
Mitsubishi said the acquisition was complementary to its existing commercial aircraft business, in particular the development of the SpaceJet commercial aircraft family.
Seiji Izumisawa, chief executive of Mitsubishi Heavy Industries, explained: “As we outlined during the recent Paris Air Show, we are working hard to ensure that we provide new profit potential for airlines and set a new standard for passenger experience.
“This transaction represents one of the most important steps in our strategic journey to build a strong, global aviation capability.
“It augments these efforts by securing a world-class and complementary set of aviation-related functions including maintenance, repair and overhaul, engineering and customer support.”
Izumisawa concluded: “In combination with our existing infrastructure and resources in Japan, Canada and elsewhere, we are confident that this represents one effective strategy that will contribute to the future success of the Mitsubishi SpaceJet family.
“MHI has a decades-long history in Canada, and I hope this transaction will result in the expansion of our presence in the country, and will represent a significant step in our growth strategy.”
The CRJ production facility in Mirabel, Québec will remain with Bombardier.
“We are very pleased to announce this agreement, which represents the completion of Bombardier’s aerospace transformation,” said Alain Bellemare, chief executive, Bombardier.
“We are confident that MHI’s acquisition of the program is the best solution for airline customers, employees and shareholders.
“We are committed to ensuring a smooth and orderly transition.”
Bellemare continued: “With our aerospace transformation now behind us, we have a clear path forward and a powerful vision for the future.
“Our focus is on two strong growth pillars: Bombardier Transportation, our global rail business, and Bombardier Aviation, a world-class business jet franchise with market-defining products and an unmatched customer experience.”
Bombardier will continue to supply components and spare parts and will assemble the current CRJ backlog on behalf of MHI.
CRJ production is expected to conclude in the second half of 2020, following the delivery of the current backlog of aircraft.
Bombardier will also retain certain liabilities representing a portion of the credit and residual value guarantees totalling approximately US$400 million.
This amount is fixed and not subject to future changes in aircraft value, and payable by Bombardier over the next four years.
The transaction is currently expected to close during the first half of 2020 and remains subject to regulatory approvals and customary closing conditions.