Bombardier expects its CRJ production to end in the second half of 2020

Bombardier says it expects to build the remaining backlog of Canadair Regional Jet (CRJ) aircraft at its Mirabel facility over the next 12 to 15 months as it works towards regulatory approval for the sale of the program to Mitsubishi Heavy Industries.

The CRJ program is Bombardier’s sole remaining presence in commercial aircraft production, having completed the sale of its Q400 turboprop program to De Havilland Aircraft of Canada in June 2019.

In the same month, it was announced Bombardier had agreed to sell its CRJ program to Mitsubishi Heavy Industries (MHI) for US$550 million. The transaction, which required regulatory approval, also included Mitsubishi taking on US$200 million of liabilities in the CRJ program.

Bombardier said in its second quarter financial results published on Thursday (Canadian time) it expected the deal with MHI, which is the parent company of Mitsubishi Aircraft Corporation that makes the SpaceJet, to be completed in the first half of calendar 2020.

“The CRJ production facility in Mirabel, Québec will remain with Bombardier and will continue to supply components and spare parts and will assemble the current CRJ backlog on behalf of MHI,” Bombardier said.

“CRJ production is expected to conclude in the second half of 2020.”

Bombardier said it delivered 17 commercial aircraft in the second quarter comprising six Q400s and 11 CRJs, with the backlog sitting at 41 aircraft.

Bombardier was in the midst of a corporate restructuring that was announced in May, which puts all its aviation operations into a single reporting segment called Bombardier Aviation.

Given its withdrawal from commercial aircraft production, Bombardier Aviation was centred on business jets and its aerostructures facilities in Mexico, Montreal and Texas. Bombardier’s Belfast and Morocco aerostructures operations were being prepared for sale.

Bombardier said its business aircraft order backlog stood at US$15.3 billion at June 30 2019, an increase of seven per cent from US$14.3 billion at December 31 2018.

“As the Global 7500 ramp-up progresses on plan and with all 2019 deliveries now in completion stages, the aircraft continues to demonstrate unmatched short runway performance by completing the first ever non-stop flight from London City Airport to Los Angeles,” Bombardier said.

Business aviation grew revenues six per cent to US$1.382 billion, while earnings before interest and tax (EBIT) fell 22 per cent to US$84 million.

In terms of the outlook, Bombardier said it expected to deliver between 175-180 aircraft in calendar 2019, including between 15-20 Global 7500 business jets.

The previous guidance was for 150-155 business aircraft deliveries and 30 commercial aircraft deliveries.

Bombardier said it delivered 35 business aircraft in the second quarter, up from 34 deliveries in the prior corresponding period.

VIDEO: A look at the Global 7500 from the Bombardier YouTube channel.

“We are very happy with our continued momentum in aerospace, where our transformation is progressing ahead of plan,” Bombardier chief executive Alain Bellemare said in a statement.

“We have successfully addressed our underperforming commercial aircraft programs and are now fully focused on business aviation, where the ramp-up of Bombardier’s largest growth program, the Global 7500, is proceeding as planned, as are our aftermarket growth strategy and our product portfolio enhancements.”

In terms of the financial results, the company reported a net loss of US$36 million for the three months to June 30 2019, compared with net profit of US$70 million in the prior corresponding period, as the challenges with the aviation transformation and in its rail division weighed on the bottom line.

Revenue rose one per cent to US$4.314 billion.