Bombardier Surrenders To Boeing-Airbus Duopoly With Sale Of Commercial Business
Montreal-based aircraft manufacturer Bombardier is now throwing in the towel in its fight to penetrate the commercial aviation industry. The company announced that it will be selling its regional jet business to Mitsubishi Heavy Industries for $500 million.
For the past few years, Bombardier has been trying to penetrate the commercial aviation industry long dominated by fierce rivals Boeing and Airbus. The announcement of the sale of its aviation business is a clear indication that Bombardier is admitting defeat in the face of heavy competition within the industry.
Amidst decreasing sales figures and added pressure from shareholders, Bombardier has slowly been reducing its involvement in commercial aviation. In 2017, Bombardier sold its C Series planes to Airbus, which renamed the 130-seat capacity jet to the Airbus 220.
The sale marks the end of an era for the company, which has been struggling to break the duopoly held by Airbus and Boeing. Even with the rise of new firms attempting to enter the highly lucrative market, Airbus and Boeing's dominance continues to be unaffected. In 2018, Brazilian aircraft manufacturer Embraer gave up on competing with the two juggernauts and agreed to form a joint venture with Boeing instead.
One of the factors that ensure both companies' dominance is the huge capital expense required to develop and manufacture planes at scale. Despite the various mistakes both Boeing and Airbus have committed, their dominance continues to be unchallenged.
According to the firm's CEO, Alain Bellemare, the company will now shift its focus on its train and private aviation business. Mitsubishi reportedly agreed to pay $550 million in cash to take over Bombardier's commercial aviation operations.
Bombardier announced that its facilities would still continue to manufacture regional jets, but the planes would be made on behalf of Mitsubishi. However, some of the company's manufacturing facilities in Montreal will apparently be shut down by the second half of the year.
Seemingly unfazed by the past companies that have given up challenging the duopoly, Mitsubishi is one of a handful of companies that is still willing to take on Boeing and Airbus.
Mitsubishi had initially stumbled in getting its regional jet program off the ground, but the company is now ready to take on the challenge. Mitsubishi recently updated its branding and unveiled its plans at the Paris Air Show last week.
The company rebranded its program, which is now called Spacejet. Along with Mitsubishi, China's Commercial Aircraft Corporation of China (COMAC) also unveiled its plans to enter the commercial aviation industry with the intention of taking on industry leaders Airbus and Boeing.