Early this morning the news broke that Mitsubishi is in serious talks with Bombardier about the CRJ program. As the morning wore on confirmations came in. The surprise here is the surprise. Four months ago we shared ideas on this very outcome with our subscribers.
The focus now should be on what comes next. The deal makes sense for both parties. Here is our view.
- While the MRJ is an impressive aircraft, the MITAC team needs more talent. Buying the CRJ program is not about the aircraft, it is about the associated talent pool. Specifically, the marketing, engineering, production and certification people that would come with it.
- The lawsuit with Bombardier goes away – the lawyers move from litigation to deal making.
- Mitsubishi acquires or connects to a global support network. This is critical because what they had hoped to get from Boeing goes away as Boeing Brazil Commercial emerges. Customer support is crucial in commercial aerospace (viz. Sukhoi Superjet). Bombardier’s team is well established and global.
- With a base in Quebec, MITAC can benefit from a North American production site close to an important market. The news gives color to the earlier news about building the MRJ in the “US”. Canada and the US have a free trade agreement in place.
- Mitsubishi could end up with two production facilities, Japan for the MRJ90 and, potentially, Quebec for the MRJ70. Given the way aerospace works these days, this could be a good outcome for Mitsubishi and Quebec. One can easily visualize the Quebec community’s warm welcome to Mitsubishi as it did for Airbus.
- The acquisition of the CRJ program is like a “protein shake” for the MRJ program.
- The other shoe has dropped; Bombardier exits commercial aerospace.
- Bombardier now focuses on its highly successful business jet programs.
- As the Global program demonstrates, Bombardier has and will retain state of the art aerospace technology and engineering talent.
- Even if a significant amount of the company’s aerospace talent moves with the CRJ program (as with the Q400 and CL-415), the OEM has top-notch people in place to ensure success with the business jet programs. Which is now the primary aero related focus for Bombardier.
In summary, a win-win for both sides.
- The provincial government is likely to welcome this move with open arms. At least with as much warmth as they have given Airbus.
- In two short years, Montreal will, potentially, move from a “one big dog” location to “three big dogs”.
- Quebec, we assume, will be offering Mitsubishi all kinds of incentives to keep the local CRJ talent pool and build the MRJ70 at Mirabel. The MRJ90 can be built in Japan.
- This probably includes a greenfield factory at Mirabel as the CRJ tooling is not useful to Mitsubishi. Mitsubishi will want a new plant with the latest production technologies. They are way behind schedule and this move could speed things up a lot. It also de-risks the program.
- Airbus likely would be pleased to see the CRJ line moved out of the current facility. They probably need that space for ramped up A220 production and completion. Airbus knows the value of ramping production to thwart the competition – in this case, Embraer.
- Speaking of which, with the rise of Boeing Brazil – Commercial, Mitsubishi benefits from moving away from the Seattle cluster. The support the MRJ hoped for from Boeing will diminish as the Brazilians join the Boeing family.
Co-Founder AirInsight. My previous life includes stints at Shell South Africa, CIC Research, and PA Consulting. Got bitten by the aviation bug and ended up an Avgeek. Then the data bug got me, making me a curious Avgeek seeking data-driven logic. Also, I appreciate conversations with smart people from whom I learn so much. Summary: I am very fortunate to work with and converse with great people.