Bombardier announced in June 2019 that it had agreed to sell the CRJ program to Japan’s Mitsubishi Heavy Industries. The deal includes the CRJ services and support network, which has facilities in Montréal and Toronto and service centers in Bridgeport, West Virginia and Tucson, Arizona. It also includes the type certificates for all of the CRJ models.
However, the deal does not include the CRJ production facility in Mirabel, Quebec. This facility will continue to assemble the CRJ family on behalf of MHI until Bombardier’s current backlog is exhausted, which Bombardier expects to happen in the second half of 2020.
At the time the two manufacturers announced the deal, MHI refused to say whether it would restart production of the CRJ family at a new site once production ends at Mirabel. We do not think it will. The deal gives MHI ownership of Bombardier’s regional airliner support network, something that MHI will eventually need to support its own regional jet models in North America. In the meantime, it can operate the facilities profitably by supporting the large CRJ fleet in operation.
Creating a new facility to build new CRJs would require a substantial investment by MHI, and it would need to see a potential upside for the CRJ family over the long term to justify the expense. That’s not likely to happen.
Demand for the CRJ family slowed to a trickle in recent years, averaging only about 21 orders per year during 2015-2018. The CRJ family’s most popular model by far, the CRJ900, has not done well against the rival Embraer E175. The Embraer model has a wider fuselage and more spacious interior, and recent tweaks to its wing increased the aircraft’s fuel efficiency. The first of Embraer’s re-engined and upgraded E-2 jet family achieved certification in March 2018, increasing the competitive pressures on the CRJ program.
Bombardier said in June 2018 that it had ruled out an engine change for the CRJ family, claiming that new engines would add weight that would erase most of the gains in fuel efficiency. Without new engines, demand for the CRJ will remain weak.
New orders for 20 CRJ900s from Delta Air Lines announced in June 2018 and for 15 aircraft from American Airlines placed during the year boosted the program in the short term, but do not represent a major change in market sentiment. And United Airlines’ decision to convert 50 used CRJ700s into the new 50‑seat CRJ550 configuration does not change the outlook for the program.
At the end of March 2019, Bombardier’s backlog included orders for CRJ900s from American Airlines (15), Delta Air Lines (12), Uganda Airlines (4), and Chorus Aviation, parent company of Air Canada Express and Jazz Charters (9). The backlog also included orders for six CRJ900s for undisclosed customers, and five for CIB Leasing. Our forecast assumes that Bombardier will deliver all 51 of these aircraft in addition to three CRJ900s it delivered in the first quarter of 2019. However, CIB Leasing and/or another customer may cancel orders in the future, which would lead to lower deliveries than we expect.
Bombardier told trade press after it announced the deal that it was no longer accepting orders for the CRJ, so the backlog is now fixed. Our forecast assumes that production will end in 2020 in line with Bombardier’s guidance.